Earnouts

Earnouts involve deferring some element of the consideration to a point following completion, typically between 12 and 36 months. Agreed targets are used to measure performance during the period of the Earnout. These targets are usually based on financial projections that have been presented in the Information Memorandum, but can also be other agreed targets (traffic, revenue, etc).

Earnouts are often used to manage risk for buyers and to ensure that the price paid for the business is based on the performance that is actually delivered. In addition they are a useful mechanism for locking in key employees during the critical integration period and allowing time for succession planning.

Provided that targets are hit earnouts usually result in a higher value to the business for the shareholders. This said they can be complicated and the Fusion team will be able to advise you on the issues that you and your fellow shareholders need to consider, as well as negotiate the key terms.

Following completion we will also be on hand to work with your lawyers to manage and advise on how issues are managed, as well as to handle any negotiations that are required with the Purchaser for the calculation of any future additional consideration.