“Using Earnouts in Corporate Acquisitions”
“The Oilfield Service Industry in the United States”
August 28, 2003
“Post-Acquisition Integration”
November 7, 2005
Graves & Co. White Paper
An earn-out is a mechanism in which part of the purchase price is contingent upon future performance of the target business. A typical earn-out might include payments to the seller every year for three to five years based on a percentage of the revenue of the target business that exceeds targeted levels. The advantages, disadvantages, and potential problems and pitfalls are examined.
