Category: Rollover Equity and Earnouts

Selling a business represents a significant decision for any business owner, often embodying the culmination of years, if not decades, of hard work and dedication. As owners approach a potential sale, one of the most pressing questions beyond valuation or deal structure is understanding what their involvement will be once a transaction is complete.

In middle-market mergers and acquisitions (M&A), earnouts have become an increasingly popular mechanism for structuring transactions. This contingent payment arrangement, in which a portion of the purchase price is linked to the future performance of the selling company, offers benefits to both buyers and sellers, especially in uncertain economic conditions.