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Do you know where I can read more about the structure of "earn outs"? They seem like just another trap, to be clear.
by robbintt 4y ago
Do you know where I can read more about the structure of "earn outs"? They seem like just another trap, to be clear.
- kurthr 4y agoI'm not an expert, but I've seen the inside of a couple of deals like this in the $100M range. I saw larger % earnouts than described below (e.g. in the 30-50% range), which were based on milestones (e.g. products going to market on time) and income (e.g. $ customer sales over following several years). It's worth noting that the deals closed in a significant amount of stock so that is also an incentive to keep the buyers price high (but that the earner realistically has limited influence over that). https://news.crunchbase.com/ma/earnout-plan-startup-sale-how-to-use-price/ https://news.crunchbase.com/ma/earnout-plan-startup-sale-how...