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Description
In the current economic climate, buyers and sellers of companies are less able to predict the future performance of a target business and M&A transactions are more likely to include earnouts (and in more significant amounts) than before. Earnouts can be useful in allocating the future risks and rewards of a target business but have become more challenging to design and implement in the current economic environment.
Earnouts often smooth over disagreements during the negotiation of the deal price only to result in post-closing disputes over the earnout itself. Counsel must draft explicit and specific performance metrics tailored to the target business, as well as precise methodologies to calculate the achievement of the earnout. A key objective is to avoid disputes over the achievement of the earnout post-closing or resolve them quickly.
Listen as our authoritative panel explains recent trends in the use of earnouts, the pros and cons of including them in M&A deals, and strategies for structuring earnout terms in a way that benefits and protects both buyers and sellers.
Presented By

Mr. Dorough-Lewis’ experience in the corporate and federal government sectors allows him to successfully and efficiently navigate the complexities of mergers and acquisitions, debt and equity financing, joint ventures, technology, government contracts, and other corporate transactions. He works with both buyers and sellers in M&A transactions and has experience representing entrepreneurs, buyers, and sellers across industries in addressing the unique challenges for all parties involved in a transaction. In sales transactions, he is familiar with the potential legal risks involved and works to minimize those issues, while creating advantageous transactions that meet the short- and long-term goals of his clients.

For more than 40 years, Mr. Pryzant has helped clients successfully navigate the M&A process, which can be one of the most complex corporate transactions for both buyers and sellers. Regardless of the transaction—whether mergers and acquisitions or equity and debt financings—he knows that the most critical part of his job is to listen to his clients and help them with their legal matters in a timely and cost-effective manner. Mr. Pryzant works with entrepreneurs who want to sell or merge their companies, and the buyers of those companies, each of whom faces their own legal challenges with the transaction.

For more than three decades as a corporate lawyer, Ms. Saxman has counseled clients—from entrepreneurs and startups to large, privately held companies across multiple industries—through every phase of growth, during times of economic prosperity and economic downturn. She prides herself on handling matters "in scale" with an eye toward practical advice that advances company objectives. Ms. Saxman works with clients in two capacities: executing deals and functioning as outside general counsel, often at the same time. Her clients benefit from this continuity of service and the institutional knowledge she develops by their side. She knows what it's like to run the business and stays in the trenches with the client after the deal is closed.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Live Online
On Demand
Date + Time
- event
Wednesday, November 6, 2024
- schedule
1:00 p.m. ET./10:00 a.m. PT
Outline
- Earnouts
- Current market trends
- Determining when an earnout is appropriate for the transaction
- Performance metrics and other threshold issues
- Structuring earnout provisions
- Operating control issues
- Dealing with unanticipated events
- Post-closing covenants from buyer and seller perspectives
- Determining when performance metrics have been achieved
- Resolving conflicts regarding the earnout
Benefits
The panel will review these and other critical issues:
- When is an earnout the right tool to bridge the valuation gap?
- What is the best metric to use for an earnout, and how is it best defined?
- What covenants are appropriate for operating the target business after closing with respect to the earnout?
- What dispute resolution provisions should be included in the purchase agreement regarding the earnout?
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