0 an amount of money paid to the seller of a company in addition to the price that was agreed, often because the company has performed well:
Outside factors may also impact the company's ability to achieve earnout targets.
In an earnout, part of the purchase price is paid after closing based on the target company achieving certain financial goals.
The terms and conditions of an earnout are largely dependent on which party will actually manage the business following the closing.
Because of these limitations, sellers often negotiate earnout terms very carefully.
