How To Structure Your Earn-Out An earn-out is a way to bridge the gap between what you want for your business and what a buyer is willing to pay. An earn-out is when a portion of your business’ sale price is set aside for payment in the future but only on the condition that certain goals are met. The conditions are set by the acquirer. You will need to stay on for a few years as an employee of the acquiring company and lead your team to hit the earn-out goals. Most owners would prefer all of their cash the day they sell their business and most buyers would prefer to pay the entire amount contingent on future performance. Deals
How One Move Was Able to Double The Value Of A Business James Garvey and his partner were able to double the value of a business. They grew Objective Loyalty from a standing start in 2005 to $2.5 million in EBITDA before they decided to sell their email marketing platform. Garvey’s investment banker spent six months shopping the deal without a single offer. Then Garvey decided to switch tactics and approach the strategic partners who already knew the company well. Garvey got an offer and was able to double it quickly through some shrewd negotiation. Listen below to see how one pivot doubled the value of this business!
A quick blog post that may be useful if you are thinking about purchasing a business. There are many critical decisions that need to be made before you are at the state of making an offer, one of these […]