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The Intricacies of M&A from Start to Finish

M&A Science

NOTE

Challenges of Earn Outs in Acquisitions and Course Corrections

When using an earn out based structure, it's important to clearly define the conditions for payment. Monitoring is crucial to avoid complications, such as burdening your team with additional costs. If the parameters of the acquisition change, course corrections must be made to meet objectives, which can lead to heated discussions. Earnouts are typically used when there's a significant difference between the buyer's valuation and the seller's expectation. Avoiding such situations is crucial to prevent problems.

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