Meaning & use
earn-out
Last updated
UK/ˈɜːn aʊt/
US/ˈɝːn aʊt/
Meaning
nouncountablebusinessfinance
A deal arrangement in which part of the price for a business is paid later, depending on whether the business meets agreed targets.
Grammar: Countable: an earn-out clause.
Patterns
- an earn-out clause
The founder accepted a smaller upfront payment plus an earn-out.
The earn-out depends on sales reaching a set level.
Disputes over the earn-out ended up in court.
Common combinations
- earn-out clause
- The contract has an earn-out clause.
- earn-out period
- The earn-out period lasts three years.
- earn-out payment
- The first earn-out payment arrived in June.
- structure an earn-out
- Lawyers structured an earn-out.
- earn-out target
- They missed the earn-out target.
Synonyms and how they differ
- contingent payment
- The formal description of money paid only if conditions are met.
- deferred payment
- Delayed, but not necessarily dependent on performance.
- bonus
- A reward, not part of a purchase price.
- milestone payment
- A payment tied to a specific stage.
Word family
Practice
An earn-out is usually part of ___.
Choose one answer.
It is a deferred price tied to performance in an acquisition. The others do not use that structure.
Make it your own
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