Episode 32: Sell Side Short on Earnouts
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Episode 32: Sell Side Short on Earnouts
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In this episode of Sell Side Shorts, Michael Stanley breaks down one of the most common deal-making tools used to close that gap: the earnout.
Michael explains how earnouts work, why buyers use them to manage risk, and why sellers should approach them carefully. He also shares key considerations when structuring an earnout, including the importance of choosing the right performance metrics, avoiding potential pitfalls tied to EBITDA-based calculations, and creating a clear process for measuring results after closing.
Whether you're preparing to sell your business or simply want to better understand M&A deal structures, this episode offers practical insight into how earnouts can help get a deal across the finish line while protecting both sides of the transaction.