News & Analysis as of

Selling a Business Earn-Outs

IR Global

About Earnouts… and Reducing Owner Dependence to Avoid Them

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The owner of an Accounting business in California is in advanced discussions to sell her business to a New Jersey-based buyer. Many terms are settled… but the parties have acknowledged that the business is ‘dependent on...more

Jones Day

Earnouts in M&A Transactions: Recent Decisions From Delaware

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In 2024, Delaware courts issued multiple instructive decisions on earnout provisions in life sciences M&A transactions. ...more

Mintz

Seller Considerations When Negotiating a Letter of Intent

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Negotiating and signing a Letter of Intent (LOI) is a key inflection point in the process of selling your business. Buyers and sellers both want the LOI to ensure a base level of understanding on certain key terms such as...more

Womble Bond Dickinson

Earnout Deals Surge in Uncertain Times – What M&A Professionals Need to Know About Earnouts

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The M&A market has witnessed a major increase in the use of earnout deal terms after 2021. The number of deals with earnout provisions jumped from around 20% in 2021 to 33% in 2023....more

Tonkon Torp LLP

You’re Not the Boss Anymore

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It’s nice to get paid. Giving up control of your business? Well… that’s a different story. On closing the sale of a business, owners realize a dramatic financial return on their investment. However, few buyers are willing to...more

Venable LLP

Earnouts and Their Tax Treatment

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As buyers and sellers engage in negotiations for the sale of a business, often there may be disagreements as to the value and expected growth of that business. One party might currently value the business higher than the...more

Blake, Cassels & Graydon LLP

Mieux comprendre les clauses d’indexation

Lorsque les vendeurs et les acheteurs d’une entreprise privée sont sur le point de conclure une opération, mais peinent toujours à s’entendre sur le prix d’achat de la société cible, il arrive souvent qu’ils envisagent alors...more

Blake, Cassels & Graydon LLP

Don’t Burn Out: Earn Out

When sellers and buyers of a private business are close to a deal but cannot agree on the purchase price for the target company, they often turn to earnouts. Simply put, earnouts are contractual provisions stipulating that a...more

DarrowEverett LLP

How Earnout Provisions Can Supply Great Value for Buyers, Sellers

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Earnout provisions can be an effective tool for addressing the potential disconnect between a seller’s expectations and a buyer’s ability to pay when negotiating a business combination transaction. Earnout provisions, or...more

Procopio, Cory, Hargreaves & Savitch LLP

6 Key Considerations When Selling Your Privately Held Company

If you’re looking to sell your privately held company, there are six key considerations to keep in mind that should increase your sales price, put more proceeds in your pocket after the sale, make the sale process flow...more

Rivkin Radler LLP

The Earnout: Contingent Purchase Price or Compensation?

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A More Cautious Approach- Compared to the torrid pace of M&A transactions last year, the current year seems rather pedestrian. That is not to say businesses are not being sold; they are....more

Rivkin Radler LLP

Tax Increases Are In Sight

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Summertime in Washington- On August 11, the Senate passed the $3.5 trillion budget resolution for the 2021-2022 fiscal year – S. Con. Res. 14, as amended – by a vote of 50 to 49, strictly along party lines, including...more

Mintz Edge

Management Carve-Out Plans

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A company may find itself in a position to sell for a variety of reasons: a sale may be necessary to continue its growth, a potential buyer made an offer too good to pass up, or the owners are simply looking towards their...more

Farrell Fritz, P.C.

The Earnout in Sales Transactions

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What’s the Purchase Price? If you advise me that you are selling your business for $32,000,000 and that $5,000,000 of the $32,000,000 will be paid through an earnout, my response to you is that you are selling your...more

Winstead PC

PE Firms: The Earn-Out Conundrum—Avoiding Post-Purchase Conflicts With Private Company Sellers

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When a private equity (PE) firm buys the controlling interest in a private business, the purchase often includes an earn-out provision which calls for the owner to remain active in the business for some period of time. The...more

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