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Earn-Out Structured Acquisition (Bridge Valuation Gaps)

Bridge buyer/seller price gap with performance-based earn-out — pay based on hitting revenue/EBITDA targets.

Overview

When seller wants $10M but buyer will only underwrite $7M, structure $7M upfront + $3M earn-out over 2–3 years contingent on hitting revenue or EBITDA milestones. Aligns interests (seller stays motivated during transition), reduces buyer risk, defers cash outflow. Typical structure: 70/30 base-to-earnout. Watch: earn-out disputes are top litigation source — precise metric definitions, dispute resolution, and buyer operational restrictions during earnout period are critical.

Best fit
Deals with valuation disagreementOwner-transition acquisitionsHigh-growth targets
Estimated impact
20–40% of purchase price deferred + performance-contingent

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