In May, we wrote about the increased focus on earn-out provisions during the pandemic as a method to mitigate the risk of a target’s post-closing under-performance and to bridge any valuation gap between the purchaser and seller. More recently, we discussed post-closing balance sheet adjustments as a separate tool to address the same risk. In this article, we will focus on (i) reverse earn-out provisions and (ii) a review of the use of earn-outs in 2020 M&A deals.
Earn-out vs. Reverse Earn-out
As described in more detail in our May post, a ‘classic earn-out’ refers to a post-closing increase … Continue Reading