Negotiating Price: All Earnouts Are Not Created Equal


Picture this scenario: you’ve worked your entire adult life building up the value of your business and you’re ready to execute your exit strategy – a sale to another company that will enable you to retire comfortably. But, there’s a catch in the deal. The buyer is expressing doubts about the projected earnings of your company despite all of your charts showing a clear upward path in earnings well into the future. How can you bridge the gap between the buyer’s concerns and your own total certainty about the future performance of your business? Simple, the buyer says, let’s use an earnout.

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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.

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