Earn-Out Agreement

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Earn-Out Agreement

An agreement in which one pays a lump sum to buy a company and states that he/she will pay a further sum if certain, stated conditions are met. An earn-out agreement is a type of contingent contract.
References in periodicals archive ?
The rationale for earnout agreements can also be discussed in greater detail.
One class structure that has worked is for the first 50- or 75-minute class (or first half of a 180-minute class) to be devoted to a combination of in-class discussion of cross-cultural elements of negotiations and/or valuations and/or earnout agreements.
Katsumi is being brought into the negotiations to develop the final element of the negotiation--the earnout agreement to bridge the valuation gap that evolved during the earlier negotiations.
Javier's employment contract is related to the earnout agreement in that its term will likely match the term of the earnout agreement.
Denshi understands this psychological impact on the founders of the companies they acquire and buffers that impact with the earnout agreement (providing Javier with the ability to capture some of the value created during the earnout period) as well as a bonus plan for managers based on performance contributions to the consolidated performance of Denshi.
The earnout agreement is the means to share those risks.
The transaction closed today for a cash price of approximately $5 million with potential additional amounts to be paid under earnout agreements.
On some occasions in the past, Katsumi has agreed to earnout agreements in which there is some graduated scale.
THE LAST PHASE OF THE NEGOTIATIONS--THE EARNOUT AGREEMENT
The possible performance milestones associated with an earnout agreement are Revenue, Gross Profit, and Net Profit.
Conversely, if the earnout agreement had payments denominated in yen, then a stronger or weaker yen against the euro during the earnout period would have no financial impact on Denshi.
The objective of the upcoming final stage of the Denshi/IDS negotiation between Javier Portilla and Katsumi Shimura is to explore the possibility of overcoming the "valuation gap" impasse through an earnout agreement and to agree on the term of Javier's employment agreement with Denshi.