Earnouts depend on future conditions
An earnout may provide additional consideration if defined performance or other conditions are met after closing. The metric, measurement period, accounting rules, buyer control, reporting access, and dispute mechanism all affect whether it is achievable.
Rollover equity retains investment exposure
A seller may reinvest some proceeds into the post-transaction business. The ownership rights, dilution, governance, liquidity, future financing, transfer limits, and exit path depend on the actual documents.
Compare certainty, control, and risk
Contingent or continuing value may differ from cash at closing in timing, tax treatment, control, and loss risk. A high headline value should be evaluated alongside the probability, conditions, and consequences of receiving it.
Use independent professional advice
These structures can carry significant legal, tax, securities, and financial implications. Have qualified advisers review the complete proposed terms before making decisions.