Reply To: Earn Outs as part of acquisition deal


Petros Lampropoulos

In my organization we like to use earn outs or conditional payment structures as part of the deal and mostly in those cases that the revenue sustainability is questionable and the business plan assumptions are vague and based on very weak or no historical benchmarks. In most of the times we structure the deal in a way so that the targets management remain in place and we work with a mutual target to increase revenue and meet the business plan numbers trying to provide support and maximizing synergies. Both an earn out and a conditional payment (upon meeting specific targets) provides a hedge mechanism towards a ROI risk and towards a questionable short term future

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