Earn-outs: friend or foe?
Analysis: Ivan Seery examines the issues that lawyers should be aware of when working with companies that use earn-outs as part of a deal when buying or selling a business
If you are working with a company that is buying or selling a business, you may well come across the issue of earn-outs. These mechanisms are often used to financially tie in the seller of a business for a period after completion of the deal – generally one to three years – and to reward them for achieving target profit levels.
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