If you are considering selling a business at the larger end of the SME market, with a longevity of orders and forward earnings, it’s important to consider the concept of earnouts and contingency payments, because it will come up from interested parties.
It’s also important to recognise that earnouts as part of the purchase price have capital gains tax implications, so expert advice is essential.
Topics: Buying a business, Capital gains tax, selling a business, seller earnouts, contingency payment, transaction advice, business sale advice, earnouts
If you are considering selling a business at the larger end of the SME market, with a longevity of orders and forward earnings, it’s important to consider the concept of earnouts and contingency payments, because it will come up from interested parties.
It’s also important to recognise that earnouts as part of the purchase price have capital gains tax implications, so expert advice is essential.
Topics: Buying a business, Video, selling a business, seller earnouts, contingency payment
Earnouts and contingency payments are typical features of business sales in the Australian, European and US corporate markets.
In our work in Australia, we are seeing them increasingly used in the small to medium-sized enterprise (SME) market and we’re often involved in structuring these deals, either from a purchaser’s or vendor’s side.
If you are considering selling a business at the larger end of the SME market, with a longevity of orders and forward earnings, it’s important to consider the concept of earnouts and contingency payments because it will come up from interested parties.
It’s also important to recognise that earnouts as part of the purchase price have capital gains tax implications, so expert advice is essential.
Topics: Buying a business, selling a business, business buying, seller earnouts, contingency payment, scenario planning
I recently read a blog post about the pros and cons of seller earnouts, which I believe is worth sharing.
The blog post was written by M&A specialist Dave Kauppi from MidMarket Capital, Inc, which is based in Chicago, USA. (You can click here to read Dave’s post.)
It’s a useful article if you’re considering buying or selling a business and you want to explore measures to manage the risks of transfer and protect the value of the business, including delayed or ‘at risk’ payment of part of the purchase price consideration, such as an earnouts.
Topics: Selling your business, selling a business, seller earnouts, contingency payment
