[bald]

> If there the acquisition price has a scheduled payout, don't put too much weight on any dollar amount that doesn't get paid out immediately as cash.

You actually cannot take this too serious. Often an earn-out depends on achieving certain revenue/ebitda/milestone targets. However, after the acquisition, you will find that someone else is in control over the resources you get (e.g., employees, budget, etc.). In other words, they control the input that you can use to achieve the agreed-upon output.

Thus the acquirer is frequently in a situation where they can manipulate the outcome by simply decreasing the input and thus driving you out of your earnout.

There's people who say that you should not rely on the earnout at all and make a deal ONLY if you would make it based on the immediate payout.

[keenrodent]

Having been through this personally in the past two years, I cannot amplify this comment enough.

If you have earnout targets based on resources such as headcount, marketing spending, or anything else not under your control, you either have to negotiate that the payout is triggered if resources fall, or accept that you will likely be manipulated out of the money by future resource constraints.