Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.
An agreement whereby the buyer pays part of the purchase price to the seller based on the future performance of the company, or the fulfillment of some other specified event.
Earnouts are difficult to administer and are easily manipulated by the parties. Earnouts are commonly used by private equity groups, although they are used as a small percentage of the overall purchase price.
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