Earnout
Definition
A contractual provision in an acquisition where a portion of the purchase price is contingent on the acquired company achieving specified performance targets post-completion. Earnouts bridge valuation gaps between buyer and seller expectations.
Related Terms
Related FAQ
What are earnouts and how do they affect deal pricing?
Earnouts are contingent payments in M&A: the seller receives additional payment if the acquired company hits post-acquisition targets (revenue, profit, retention).
Read full answer →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).
Read full answer →Put this knowledge to work
Use Opagio's free tools to measure and grow the intangible assets that drive your business value.