Tag archives: earn-outs

Earn-outs and reverse earn-outs

By Kiri Buchanan on February 23, 2021 Posted in M&A

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 … Continue reading

Earnouts: Sharing Risk and Reward in Uncertain Times

By Eric Vice on May 6, 2020 Posted in Corporate finance, M&A

The turbulent economic environment resulting from the COVID-19 pandemic has affected the M&A world in numerous ways. Among them is the increased focus on earnout provisions, both those in place from legacy deals and those being considered for inclusion in an upcoming transaction. This post provides an overview of the earnout mechanism and describes the … Continue reading

Smart contract applications in M&A: earn-outs

By Mark Bissegger (Toronto) on November 22, 2017 Posted in M&A, Technology and innovation

This blog has previously provided an overview of how blockchain technology and smart contracts might be adapted to the legal industry. In this post, we will explore the specific example of how these technologies may be able to simplify an earn-out agreement in an M&A transaction. What are earn-outs? In an earn-out, the seller of … Continue reading

Tax considerations for earn-outs and reverse earn-outs

By Troy Ungerman (Toronto) on September 15, 2016 Posted in M&A, Tax

As we have previously noted, earn-outs are becoming an increasingly common part of M&A deals, and there are a number of key commercial questions to consider when negotiating them. But there are also tax consequences that must be considered when structuring earn-outs. Earn-outs link a portion of total purchase price to the performance of the … Continue reading

Shareholder representatives in M&A

By Troy Ungerman (Toronto) on April 7, 2016 Posted in Corporate finance

The post-closing process can be complex and time consuming. Hiring a professional independent shareholder representative to manage post-closing matters, such as purchase price adjustments, indemnification claims, earn-outs and escrow management, may be beneficial for target shareholders and management. In recent years, shareholder representatives have been commonly used in the U.S., and they are becoming increasingly … Continue reading