Earn-Out Arrangements – Interview with David Lagasse, Member, Mintz Levin
A pivotal decision by a New York Appellate Division court holding that earnouts based on the future revenue of a dental practice violated the NY Fee Splitting Prohibition could substantially impact the structuring of health...more
In merger and acquisition (M&A) transactions, the earn-out mechanism serves as a strategic tool for conditional payment based on the prospective performance of the acquired entity. This mechanism is particularly prevalent in...more
It’s nice to get paid. Giving up control of your business? Well… that’s a different story. On closing the sale of a business, owners realize a dramatic financial return on their investment. However, few buyers are willing to...more
Do we value our possessions more just because we own them? Sometimes. Does this association of value apply to businesses? Almost always. The Cost of Risk- Buyers and sellers of a business often find themselves with a...more
Ambiguous drafting of earnout provisions in M&A agreements is a perennial source of post-closing disputes. What may have seemed clear to parties in the heat of negotiations can often become less so as time passes,...more
The pace of earnouts accelerates in M&A transactions whenever market conditions create a value gap between seller price expectations and buyer confidence levels. Earnouts are most common when the volume of merger and...more
As buyers and sellers engage in negotiations for the sale of a business, often there may be disagreements as to the value and expected growth of that business. One party might currently value the business higher than the...more
The use of earnout provisions, which buyers and sellers often use to bridge differing views of value, is on the rise, especially in the private equity and corporate venture capital markets. This White Paper examines how...more
Previously in our series, our team evaluated a number of important points that buyers should consider when embarking on a build-to-buy transaction to protect against downside scenarios in those collaboration arrangements....more
Is there a difference in enforcement between an arbitration award and an expert determination pursuant to a contract? The answer is yes, according to a recent ruling by the 3rd Circuit U.S. Court of Appeals that includes...more
Lorsque les vendeurs et les acheteurs d’une entreprise privée sont sur le point de conclure une opération, mais peinent toujours à s’entendre sur le prix d’achat de la société cible, il arrive souvent qu’ils envisagent alors...more
When sellers and buyers of a private business are close to a deal but cannot agree on the purchase price for the target company, they often turn to earnouts. Simply put, earnouts are contractual provisions stipulating that a...more
Earnout provisions can be an effective tool for addressing the potential disconnect between a seller’s expectations and a buyer’s ability to pay when negotiating a business combination transaction. Earnout provisions, or...more
An earnout provision in mergers and acquisitions contracts entitles the seller of the target company to additional compensation in the future if the target performs well after closing. Such a provision is often used when a...more
A More Cautious Approach- Compared to the torrid pace of M&A transactions last year, the current year seems rather pedestrian. That is not to say businesses are not being sold; they are....more
Earlier this month, the ACC hosted an illuminating panel presentation on Life Sciences Litigation: A Look at Milestone Disputes & Recent Trends. Panelists included Lauri Mims and Jennifer Huber, both Partners at Keker Van...more
Overview- Earnout provisions give sellers of a company rights to additional consideration if the acquired business achieves certain financial goals or specified milestones post-closing. Earnouts are often used to bridge...more
The purchase price is an integral component of any purchase and sale of an operating business, if not the integral component. As in the purchase and sale of anything, the seller and the buyer often have different opinions...more
Williams: Court of Chancery Finds Poison Pill Unenforceable - In February, the Delaware Court of Chancery held that a shareholder rights plan (a "poison pill") adopted by The Williams Companies, Inc. at the onset of the...more
In a climate where there are so many unknown factors challenging valuation methodologies, we explore a number of mechanisms that European dealmakers may consider during the Coronavirus (COVID-19) pandemic in order to bridge...more
An “earnout” is a deal mechanism used in a merger and acquisition transaction (“M&A Transaction”) which structures the terms upon which a buyer agrees to pay additional consideration to the seller after the closing of the M&A...more
What’s the Purchase Price? If you advise me that you are selling your business for $32,000,000 and that $5,000,000 of the $32,000,000 will be paid through an earnout, my response to you is that you are selling your...more
Insurance agency acquisitions and deal values are near an all-time high and all expectations are that deal flow in 2019 will match or exceed last year’s numbers. And while reported numbers tend to skew towards larger agency...more
There’s an old saying, probably at some point attributed to Abraham Lincoln or Einstein, that a bridge shows no allegiance to either side. It’s a wonderful metaphor and one that dealmakers would be wise to remember when...more
In the recent case of Glidepath Limited v. Beumer Corporation, the Delaware Court of Chancery considered the case of whether a court could apply equitable principles to reform the dates in a purchase contract for measurement...more