Reply To: Earn Outs as part of acquisition deal

#38038
Nick Picone
Participant

We have used earn-outs in several of our last acquisitions for similar reasons mentioned regarding a gap in valuations between the seller and ours and the earn-out was used to bridge the gap. How the earn-out is calculated becomes a big sticking point during the negotiation and then as mentioned becomes a point of contention post acquisition with regards to any decisions that could impact the earn-out. I would avoid them if I could but it seems like the only way to close the deal when the seller’s expectations are unrealistic.

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