Great insights Bob! Really enjoyed the breakdown of how earnouts can be both an opportunity and a challenge. The part about aligning with a strategic fit before negotiating makes so much sense especially when growth expectations are involved. from your experience do you think there's ever a scenario where pushing for more upfront payment outweighs the potential upside of an earnout?
Thanks, Noah, and good question. Generally, the more upfront, the better, as anything can happen.
The biggest reason to give up money on the overall deal in return for a higher upfront payment would be if you're not confident about hitting it. Sellers know much more about their business than their Buyers. Say, if you know tough times are ahead, you might take what you can now. Many Sellers pull the trigger when things are going great, so there could be fear of tough times ahead.
But generally, give yourself as many options as possible--especially not being forced to sell and getting competing offers.
Jamal Baloch
Jamal Baloch
Jamal
Great insights Bob! Really enjoyed the breakdown of how earnouts can be both an opportunity and a challenge. The part about aligning with a strategic fit before negotiating makes so much sense especially when growth expectations are involved. from your experience do you think there's ever a scenario where pushing for more upfront payment outweighs the potential upside of an earnout?
Thanks, Noah, and good question. Generally, the more upfront, the better, as anything can happen.
The biggest reason to give up money on the overall deal in return for a higher upfront payment would be if you're not confident about hitting it. Sellers know much more about their business than their Buyers. Say, if you know tough times are ahead, you might take what you can now. Many Sellers pull the trigger when things are going great, so there could be fear of tough times ahead.
But generally, give yourself as many options as possible--especially not being forced to sell and getting competing offers.