| Commentary

131 Earn-outs

| Commentary

131 Earn-outs

An earn-out is a payment dependent upon the future profitability of the target. In a typical earn-out, part of the consideration is paid on one or more dates in the future. How much is payable on those dates depends upon whether the target company achieves certain specified performance targets. Earn-outs are likely to apply when the sellers remain with the target company following completion and is an enticement to keep them running the company1.

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