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.
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Around PS700,000 of cash is payable immediately, and PS400,000 will be deferred in four equal six monthly instalments starting six months from completion of the acquisition, 461,538 ordinary shares in Northern Bear which are valued at approximately PS400,000 and a maximum of PS1.4m of contingent cash payable under various earnout agreements.