Earn-outs are in.
As deal lawyers know well, economic uncertainty and valuation gaps over recent years have increased the use of earn-outs in M&A.
But as M&A disputes from Delaware caution, earn-outs can also convert “today’s disagreement over price into tomorrow’s litigation over the outcome.”
Careful earn-out drafting is therefore key, as is heeding the lessons of the growing body of earn-out caselaw.
Writing in The M&A Lawyer (PDF, 194 KB), we highlight what dealmakers need to know to avoid their next earn-out clause turning into the next earn-out decision.
