How Earn Outs Impact Your Exit

earn outs

It’s all about YOUR RISK TOLERANCE and RISK SHARING.

  • Most buyers today are reluctant to use ‘cash only’ as their preferred model for acquisitions. However, when buyers see the acquired business as a springboard for growth they prefers to keep the upside potential of the business in which case earn outs are not preferred.
  • Sellers are usually reluctant to accept Earn Outs without control of their own destiny.
  • When either party or their professional advisors try to mitigate all risk, deals don’t get done.
  • Think of Earn Outs as Risk Sharing
  • Don’t forget to take account of tax implications of Earn Outs.

Goal seek a win-win solution by taking some calculated risks to get a deal done and maximize what you can get for your business.

For more read

How an Earn Out can impact the sale of your business By Bob Cohen and Sam Sacco

Entrepreneurs relief and earn outs a bit too taxing By Sharron Carle

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