Building better (earnout) bridges: What buyers and sellers should consider before agreeing to an earnout provision

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With the volatility in the M&A market over the past few years, earnouts have become increasingly popular in M&A transactions as a means of “bridging the gap” between a seller’s (higher) and a buyer’s (lower) valuation. In a transaction with an earnout, a portion of the purchase price is paid to the seller after closing and only if the company achieves agreed-upon objectives. While earnouts sound simple in concept, earnouts — like bridges — can spell catastrophe if not constructed carefully.

As…

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Will Jordan and Jacob Weber

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