Earnout, or earn-out, is a pricing structure in mergers and acquisitions in which the sellers must "earn" part of the purchase price based on the performance of the business following the acquisition.
Earnout, or earn-out, is a pricing structure in mergers and acquisitions in which the sellers must "earn" part of the purchase price based on the performance of the business following the acquisition.
Earnouts are often employed when the buyer(s) and seller(s) disagree about the expected growth and future performance of the target company. A typical earnout takes place over a three- to five-year period after closing of the acquisition and may involve anywhere from ten to fifty percent of the purchase price being deferred over that period. Buyers usually value companies based on historical performance while sellers may weight more heavily projections about higher growth prospects. With an earnout the seller's shareholders are paid an additional sum if some predefined performance targets are met. (See contingent value rights, having a similar function.)
Discovered by embedding cosine similarity (sentence-transformers MiniLM, 384-dim).