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1. Parties: Identifies and defines the parties to the agreement - typically the buyer, seller, and any guarantors
2. Background: Sets out the context of the transaction, including reference to the main purchase agreement and reason for the earnout arrangement
3. Definitions: Defines key terms used throughout the agreement, particularly financial and accounting terms crucial for earnout calculations
4. Earnout Period: Specifies the duration over which the earnout will be measured and when payments will be made
5. Calculation of Earnout Payments: Details the formula and methodology for calculating earnout payments, including relevant financial metrics
6. Payment Terms: Specifies when and how earnout payments will be made, including payment mechanics and currency
7. Financial Statements and Reporting: Outlines requirements for financial reporting, including frequency, format, and audit rights
8. Conduct of Business: Sets out obligations regarding how the business must be operated during the earnout period
9. Dispute Resolution: Establishes procedures for resolving disagreements about earnout calculations or interpretation
10. Representations and Warranties: Contains ongoing representations and warranties specific to the earnout arrangement
11. General Provisions: Standard boilerplate clauses including governing law, notices, and amendments
1. Acceleration Events: Specifies circumstances that might trigger early payment of earnout (used when parties want to address change of control or exit scenarios)
2. Security Arrangements: Details any security provided for earnout payments (used when seller requires payment security)
3. Tax Treatment: Specifies agreed tax treatment of earnout payments (used when parties want to agree on tax positions)
4. Non-Competition Provisions: Restricts seller's ability to compete during earnout period (used when seller remains involved in business)
5. Working Capital Adjustments: Mechanism for adjusting earnout based on working capital levels (used when working capital impacts earnout metrics)
6. Parent Company Guarantee: Guarantee from parent company for earnout payments (used when buyer is subsidiary of larger entity)
7. Employment Conditions: Links earnout to continued employment of key persons (used when seller/key employees continue in business)
1. Calculation Methodology: Detailed explanation of earnout calculations with specific formulas and examples
2. Accounting Principles: Specific accounting policies and principles to be applied in calculating earnout metrics
3. Pro Forma Calculations: Example calculations showing how earnout would work in different scenarios
4. Excluded Items: List of items to be excluded from earnout calculations (e.g., extraordinary items)
5. Form of Earnout Statement: Template for periodic earnout calculations and reporting
6. Key Performance Indicators: Detailed definitions and measurement methods for KPIs used in earnout
7. Payment Mechanics: Detailed procedures for processing and making earnout payments
Adjustment Period
Agreed Form
Business
Business Day
Buyer
Calculation Date
Completion
Completion Date
Confidential Information
Dispute Notice
Earnout Amount
Earnout Calculation
Earnout Certificate
Earnout Metrics
Earnout Payment
Earnout Period
Earnout Statement
EBITDA
Escrow Account
Escrow Agent
Excluded Items
Expert
Financial Statements
Financial Year
Good Faith
Group
Independent Accountant
Interest Rate
Key Performance Indicators
Material Adverse Change
Maximum Earnout Amount
Measurement Period
Net Revenue
Notice
Parent Company
Payment Date
Performance Targets
Purchase Agreement
Reference Period
Related Persons
Relevant Period
Review Period
Seller
Seller's Account
Share Purchase Agreement
Target
Target Business
Tax
Transaction Documents
Trigger Event
Working Capital
Working Day
Definitions
Earnout Calculation
Payment Terms
Financial Reporting
Information Rights
Audit Rights
Business Operation Covenants
Acceleration Events
Change of Control
Dispute Resolution
Expert Determination
Security Arrangements
Tax Provisions
Confidentiality
Non-Competition
Non-Solicitation
Representations and Warranties
Indemnification
Force Majeure
Assignment
Notices
Amendment
Waiver
Severability
Entire Agreement
Third Party Rights
Governing Law
Jurisdiction
Counterparts
Technology
Healthcare
Professional Services
Manufacturing
E-commerce
Financial Services
Media and Entertainment
Software and SaaS
Consumer Products
Business Services
Biotechnology
Real Estate
Legal
Finance
Corporate Development
Mergers & Acquisitions
Treasury
Tax
Accounting
Strategy
Business Development
Risk Management
Commercial
Compliance
Chief Executive Officer
Chief Financial Officer
Chief Legal Officer
Corporate Development Director
M&A Director
Financial Controller
General Counsel
Head of Strategy
Investment Director
Treasury Manager
Corporate Finance Manager
Business Development Director
Integration Manager
Commercial Director
Risk Manager
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