It’s looking good. You’ve received a great offer, it’s gone to Heads and due diligence is well underway.
You could book your ticket to the beach but unfortunately part of the deal is that you have to stick around for 2 years to get the rest of your money in a performance ‘earn out’.
Well, that’s not so bad is it? At least you’ll have your up-front part of the consideration in the bank. Well, yes but you’ll have little or no time to enjoy it – the Earn Out Monster will see to that.
So, the deal is done and you turn up to work at your office – I mean their office – and the name above the door has already been changed. The re-brand has started.
Your staff – I mean their staff – have all been briefed and inculcated in the new regime’s ways of doing things – they blame you for this.
The petty cash tin and your favourite bourbon biscuits have been snaffled by the newly-installed FD.
It dawns on you that this is no longer your business yet you have to be here for 2 more years working with Neville, the new MD. A driven character who will very soon drive you up the wall.
Still, at least there are clauses in the Share Purchase Agreement that says they can’t interfere with your ability to deliver your targets and achieve your earn out, aren’t there? Yes there are but will that stop them from deliberately or inadvertently distracting you from your quest? No it won’t.
This, my friend, is when the Earn Out Monster comes out to play and you will have to confront it, fight it and slay it.
Earn outs may be a necessary evil but contact me and I’ll help you overcome it: email@example.com.