Note to the Reader: This is the fifth in a series of articles that explore the definition, application and issues of including earn-outs in negotiated M&A transactions.
When a buyer and seller approach the negotiation of an earn-out, they have a common goal of arriving at an agreement that meets their respective needs. It [...]

The factors that contribute to M&A failure have been a topic of a growing number of studies conducted over the last few decades. The results of these studies have appeared in the financial press as well as materials prepared by consultants. The source, methodologies used and specifics of these studies are a subject in and [...]

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) gained prominence within the LBO community during the 1980s because it represented a number that could be used to determine the gross dollars that could be made available to service acquisition debt. At that time, EBITDA was more relevant because the deal criteria of the typical LBO [...]

Using the Fair Market Valuation and the seller’s asking price as a starting point, there are seven critical factors that will influence the premium or discount to be applied in reaching a negotiated purchase price package. These seven factors include:

The types of buyer.
Financial parameters.
The general attractiveness of the company.
The [...]

Note to the Reader: This is the fourth in a series of articles that explore the definition, application and issues of including earn-outs in negotiated M&A transactions.
In the last installment of this series, we explored the buyer’s considerations when deciding whether to propose an earn-out agreement to a seller. In this article, we [...]

Note to the Reader: This is the third in a series of articles that explore the definition, application and issues of including earn-outs in negotiated M&A transactions.
An earn-out can reduce a buyer’s initial investment, bridge the value gap and provide an incentive for the seller. For the value-oriented negotiator, the primary objective of [...]

Note to the Reader: This is the second in a series of articles that explore the definition, application and issues of including earn-outs in negotiated M&A transactions.
An earn-out is an opportunity for both buyer and seller to maximize their respective post-acquisition returns on investment, but it doesn’t always play out that way. Generally, [...]

An earn-out can allow an otherwise willing buyer and seller to bridge the gap in their respective valuation concepts for the business in order to complete a sale. In periods of economic and political uncertainty, earn-outs seem especially attractive because they can help get deals done in a difficult business climate.
Recently, one adviser gave [...]

Strategies to Avoid the Overpayment Trap
The Overpayment Trap explored how the M&A process is oriented toward getting sellers top dollar for their companies. Becoming mindful of the overpayment trap and deciding to take proactive measures to avoid it are essential first steps. This article provides specific strategies and techniques that you can use to avoid [...]

The price paid for a lawfully acquired business interest is a fait accompli—an accomplished and irreversible fact. The parties have negotiated, had an opportunity to perform their due diligence, reached a meeting of the minds and consideration has changed hands. The transaction is done—the cash register has gone Ka-Ching.
While the price paid is a fact, [...]