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Contingent Consideration
Definition
An element of M&A purchase price that is payable only if specified future conditions are met, such as revenue targets or product milestones. Contingent consideration must be measured at fair value at the acquisition date and is particularly common in deals where intangible asset values are uncertain.
Related Terms
Cap Table (Capitalisation Table)
Capital Deepening
Capital Expenditure (CapEx)
Capital Intensity Ratio
Capitalisation of Intangibles
Related FAQ
What is an earnout and why do acquirers use them?
An earnout is contingent consideration in M&A where the seller receives additional payments if the acquired company hits post-close performance milestones (revenue, EBITDA, retention).
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