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Earn-out agreement

template

Used alongside an asset or equity purchase agreement — part of the price is paid at closing, with the rest paid later only if agreed performance targets (revenue, profit, or other metrics) are met. Bridges a gap when buyer and seller disagree on what the business is really worth.

Good fit for

  • +Bridging a valuation gap between buyer and seller by tying part of the price to future performance
  • +A seller staying involved for a transition period, with their remaining payout linked to how the business performs under them

Not ideal for

  • −Simple, fully-upfront-cash deals — this only adds value when a genuine valuation disagreement or performance uncertainty exists

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