Earn-out

Earn-out is a contractual provision in an M&A deal where part of the purchase price is contingent on the future performance of the acquired business, typically measured against predefined financial targets such as revenue or EBITDA. This mechanism helps bridge valuation gaps between buyers and sellers by aligning incentives post-acquisition. While earn-outs can create upside for sellers, they also introduce complexity and potential for dispute if performance metrics or operational control are not clearly defined.

P4i structures and negotiates earn-out arrangements that balance risk and reward, ensuring alignment between buyer and seller interests.