Delaware Case Exemplifies Typical Weaknesses In Earnout Provisions


Earnout provisions are often utilized when a buyer and seller disagree on valuation. A portion of the purchase price is contingent upon certain financial milestones during a specified period of time after closing of the transaction. Earnout provisions reward the seller if its projections about the future financial performance of the business are accurate, while they protect a buyer from overpaying if the projections are not. Earnout provisions seem to embody a fair compromise between buyer and seller, yet these structures often end up triggering conflicts and, in some cases, litigation.

Please see full newsletter for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Manatt, Phelps & Phillips, LLP | Attorney Advertising

Written by:


Manatt, Phelps & Phillips, LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.