Earnout
Deferred purchase-price payments that depend on the business hitting agreed results after closing.
Last updated September 5, 2026
An earnout pays the seller extra if revenue, gross profit, or another metric meets targets during a defined period. It is used when buyer and seller disagree on value or when results depend on a transition the seller will help run. Disputes are common if definitions, accounting methods, or operating control are vague. Earnouts are not the same as a seller note, which is owed regardless of post-close performance unless the note itself is contingent.