Earnouts, an Often-Necessary Evil to Getting M&A Deals Done

Buyers and Sellers generally have differences of opinion on enterprise value and in the case of small to medium sized businesses, it is common to bridge that valuation gap through the utilization of contingent payment (earnouts). Sellers don’t like the uncertainty of future payment associated with earnouts, Buyers struggle with the post-close operating restrictions commonly associated with them and both parties dislike the documentation complexity that comes with them, but yet earnouts are part of most M&A deals in the BSC sector. During this session, we will dive into when and why earnouts are used and best practices for setting yourself up for success (whether you are a Buyer or Seller) when they are part of your deal.