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Beacause it takes risk away from the purchaser, making it (hypothetically) an easier sale and worth more money. Mergers are extremely susceptible in the first 1
by djt 14y ago
Beacause it takes risk away from the purchaser, making it (hypothetically) an easier sale and worth more money. Mergers are extremely susceptible in the first 12-24 months and can actually take down the parent company if mishandled.
- codeonfire 14y agoYeah, but if they are told to meet a specific EBITDA, and the parent is charging expenses to the company, it would be in their interest to charge enough that the earn-out doesn't pay. If the parent gets to write checks with the company's money, then the earn-out goals should be on gross revenue.