Earn-out

the part of the deal price that depends on future results

In more detail

The part of the price that depends on the future results of the company that was bought: hit the targets and the seller gets the rest, miss them and they do not.

It was invented as a bridge across a gulf of expectations: the seller believes in growth, the buyer does not, and the disputed part of the price is put on the table.

Covered in the primer of chapter 6.

Where it appears in the course

In the academy “Earn-out” is not a definition but an operation: you post it yourself and watch what it does to the balance sheet.

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