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Bookmark or Share- Earnout - Definition, Structuring, Disputes - Corporate Finance InstituteWritten by CFI Team. What is an Earnout? An earnout is a risk allocation mechanism for the acquirer wherein the purchase price is contingent on the “future performance” of the target company. The acquirer pays a majority of the purchase price upfront, at the time of closing the deal, and the remainder is contingent on the performance of the target.
- Earnout - WikipediaEarnout or earn-out refers to a pricing structure in mergers and acquisitions where the sellers must "earn" part of the purchase price based on the performance of the business following the acquisition. Earnouts are often employed when the buyer(s) and seller(s) disagree about the expected growth and future performance of the target company.
- Earnouts When Selling or Buying a Business | Complete GuideOverview. What is an Earnout? An earnout is a form of deferred payment to the seller that is contingent on certain events occurring post-closing in a manner that depends on the performance of the acquired company. An earnout can be tied to revenue, EBITDA, or a non-financial metric such as retention of key employees or the issuance of a patent.
- Earnouts | M&A Definition + Examples - Wall Street PrepWhat is an Earnout? An earnout, formally called a contingent consideration, is a mechanism used in M&A whereby, in addition to an upfront payment, future payments are promised to the seller upon the achievement of specific milestones (i.e. achieving specific EBITDA targets).
- Earnout: Definition, How It Works, Example, Pros and Cons - InvestopediaWhat Is an Earnout? An earnout is a contractual provision stating that the seller of a business is to obtain additional compensation in the future if the...
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