earn out

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Also found in: Financial.

earn out

verb bring to a zero balance, bring up to date, defray the expenses, lend, loan, paid back, pay back after an advance, repayment, used upGenerally: indemnify, recoupment, reimburse, remit
References in periodicals archive ?
A portion of the earn-out payments is also subject to founders remaining in employment with the company.
The concept of an earn-out is very simple, yet its proper execution is fiendishly difficult.
An earn-out can be a valuable device in structuring an M&A transaction, particularly when the buyer and seller have divergent views about the potential future success of the target company.
Structuring a transaction to bridge a valuation gap can include utilizing earn-out payments, contingency payments or the purchase of a minority interest with an option to acquire the remaining interest at a later date and other creative approaches.
Other common forms of consideration include a share exchange, vendor take-back, and earn-out.
When an earn-out is used, parties are incorporating clearer, binary measurements, such as product launch and unit sales, rather than earnings metrics that can be more problematic and lead to disputes.
First-of-its-kind Study Demonstrates that Earn-out Negotiation and Post-Closing Management have a Powerful Impact on Investor Returns
Other approaches include forward permanent commitments with long-term earn-out provisions.
On the advice of its investment banker, Richard Barrett (then at UBS Securities), Fleet structured the transaction as an earn-out, meaning that payments to NatWest would be stretched out over a four-year period.
Earn-outs continue to be popular with 22% of deals containing earn-out provisions.
Under the terms of the agreement, PCM will pay an initial purchase price of USD 15m in cash and certain contingent earn-out consideration over a three year period.