Earn-out

(redirected from Earn Outs)

Earn-out

Refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement.

Earn-Out

In an acquisition, an additional payment made to the acquired company's former owner(s) in the event that certain earnings are met. For example, a company may acquire another for $75 million, with an additional $10 million in cash and/or stock if the acquired company's earnings outperform expectations by a certain percentage. Earn-outs are based on the acquired company's potential future earnings.
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The session will feature other key topics such as economic and industry dynamics impacting the industry, a review of 2009 M&A and the outlook for the future, valuation analysis, transaction pricing, earn outs and deal structures, successful organic growth strategies, detailed sell- and buy-side strategies as well as organizational and compensation strategies to sustain growth.
New York, NY 5/9/08 -- Enzo Biochem has acquired BIOMOL International for $15 million in cash, $3 million in unregistered stock, and earn outs over two year.
The seminar includes key topics such as economic and industry overview, a review of 2010 M&A activity and the outlook for the future, understanding key drivers of agency valuation, transactions multiples, earn outs and deal structures, understanding the legal process in an M&A transaction, private equity funding and other non-traditional capital sources, perpetuation and ESOP strategies, and special sections dedicated to employee benefit professionals related to healthcare reform, key compliance issues and business strategies for the employee benefit professional to prosper in the new world of healthcare reform.
However, if the proceeds include earn outs or shares your position will be complex and you should seek advice.
Further earn outs may occur for a maximum of US$115 million, concerning the potential Huron field on the Niscota licence (maximum US$50 million) and the level of the oil price (maximum US$65 million).
The subject matter includes key topics such as economic and industry dynamics impacting the industry, a review of 2008 M&A and the outlook for the future, valuation analysis, transaction pricing, earn outs and deal structures, successful organic growth strategies, detailed sell- and buy-side strategies as well as organizational and compensation strategies to sustain growth.
And it is likely, based on the brief press release issued with the pre-Budget report, that earn outs satisfied in shares/loan notes after April 5 will also be caught, according to Linda Marston-Weston, head of the transaction tax team at Ernst & Young's Birmingham office.
The Board of Directors has decided to be even more flexible and open, in consideration of the realities of the financial markets, to a wider array of offers, including joint ventures, earn outs, mergers and reverse mergers.
Post sale contracts like earn outs and warranties were selected as a key challenge by a quarter while finding the right advisor was also an issue for a little over a fifth.
In clarifying the terms of these acquisitions, the company stated that the purchase price for the two companies totals approximately $20 million in cash and stock, with additional earn outs possible in the future.
The consideration for this acquisition will be paid partly in cash and partly by way of future cash earn outs.
Mr Hodgson said: 'The new guidelines on earn outs indicate that the application of Income Tax and National Insurance will be brought to bear where the Revenue believes that companies have used earn-outs as a tax avoidance measure, for example where actual remuneration is disguised as additional consideration for shares.