Opinion is definitely split with business owners I talk to about this…
Some won’t consider a deal structure where they receive extra payments, based on future performance.
They want to pass the baton quickly.
Other business owners actually prefer some kind of earn-out as part of the overall agreement.
Where I see earn-outs being most useful is where there’s a stubborn gap between the current valuation and the exit valuation, which the business owners want to achieve.
But for this to really work, you absolutely must have an effective partnership during the transition phase.
The new owners need to have a credible growth plan to take the business to the next level.
And the departing owners must demonstrate their commitment to supporting the business during this process.
Just make sure the terms are crystal clear and that you’re comfortable with both the risks and rewards.
#nextlevelgrowth #exitlaunchpad