15th October 2013

Earn outs to be handled with care

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15th October 2013

Earn outs to be handled with care


Earn outs are fairly common on corporate transactions, especially where there is a valuation gap between seller and buyer. However, if they are not dealt with carefully in the transaction documentation then earn outs can convert a disagreement over price at the time of the deal into future litigation over unexpected outcomes, writes Jonathon Roy of Paris Smith