In the Press
February 7, 2024

M&A Lawyers See Flood of Work From Tool That Delays Deal Payouts (Bloomberg Law)

Professionals

M&A lawyers are grappling with increasingly complex deal-making processes as clients adopt a tool that lets buyers postpone paying the complete value of a transaction. The challenge of finding a mutually agreed upon price is encouraging buyers to use the tool, known as an earnout, to pay the seller at a later date after certain milestones are hit. Lawyers have found use of the provision skyrocketing within the past five years. “I’ve literally seen an earnout involved in every deal I’ve worked on in the last year,” said Liam Timoney, Private Equity and Mergers and Acquisitions partner. “If it’s not been ultimately featured, it’s still definitely been considered, and it’s been part of the negotiation.” He mentioned to Bloomberg Law. Earnouts are useful in a slow economic climate, when there is a large gap between what buyers expect to pay for a company and what sellers want to receive.