Fig. 01 · Glossary
Earnout
Also known as Contingent Consideration, Seller Earnout
Definition
An earnout is a portion of acquisition consideration paid after closing if defined milestones are met. In technology deals, earnouts often address disagreement over growth durability, customer concentration, product delivery, or integration risk. Good earnouts are measurable, controllable, and hard to manipulate.
Earnouts can bridge a valuation gap, but they can also create post-close conflict if the metric depends on buyer decisions the seller cannot control. Revenue earnouts fail when pricing, staffing, product roadmap, or account ownership changes after close.
The operating test is simple: if the seller cannot influence the result and the buyer can change the rules, the earnout is not a bridge. It is deferred litigation risk.
Human Renaissance glossary · operator-grade definitions · Research methodology
