Contingent Purchase Price

This topic contains 1 reply, has 2 voices, and was last updated by  Gautam Anumukonda 7 months, 3 weeks ago.

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  • #115684


    Participant

    I’ve been seeing a trend over the past 5 or so years with the M&A purchase price containing a fixed or base purchase price as well as additional purchase price consideration that is contingent on future financial results (e.g., first 12 months of EBITDA being a set amount; year 2 or 3 EBITDA/sales being a set amount; a large new customer contract being subsequently executed, etc.). Has anyone else been seeing this in the market, or using this pricing strategy with regards to their company’s M&A?

    #115695

    Gautam Anumukonda
    Participant

    Yes, I have seen this a lot with in the PPAs of private equity acquisitions of portfolio companies as their strategy is to create value within a short period of time.

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