Earn-Out
A portion of the purchase price contingent on the business hitting performance targets after the sale. Common when buyer and seller disagree on value. The risk: sellers stay involved but lose control, and the buyer can manipulate results. Structure carefully or avoid entirely.
Where This Matters
→
Exit Planning
→Everything business owners need to know about selling, exiting, or transitioning out of their company — from valuation to tax strategy to deal structure.
Partner Disputes
When co-owners disagree — from buyout negotiation to mediation to dissolution. Practical guidance for resolving business conflicts without destroying the company.
Related Terms
Need help understanding how this applies to your situation?
Browse All Terms
Enterprise Value (EV)Seller's Discretionary Earnings (SDE)EBITDA MultipleQuality of Earnings (QoE)Add-BacksDue DiligenceLetter of Intent (LOI)Holdback (Escrow)Asset SaleStock Sale (Equity Sale)GoodwillPersonal GoodwillCommunity PropertySeparate PropertyPereira MethodVan Camp MethodTransmutationBuy-Sell AgreementShotgun Clause (Russian Roulette Clause)Right of First Refusal (ROFR)View all →