What is an earn-out?
Category:
Buying a Business
An earn-out is a transaction structure in which a portion of the purchase price is paid over time based on the future performance of the business or other agreed-upon milestones.
Depending on the circumstances, earn-outs may help bridge differences between buyer and seller expectations while encouraging a successful transition.
Because earn-outs involve negotiated legal and financial terms, buyers should seek appropriate professional guidance before entering into these arrangements.