Selling Your Company: Earnouts
By Jack Mixner 714 449 1040 www.mixnerstrategy.com
Mulroy makes a crucial point. "While an earn-out may seem like an expedient means to bridge a value gap in a private company sale, it should be used only as a last resort (Mulroy, page A25.)"
Strategic Implications
Increasing the value of a company after the close of a sale may not be as easy as it seems. Take the time to make sure that an earnout is in everyone's-including both the old owner's, and the new owner's-best interests.
Reference
Mulroy, Michael. Considerations in Selling a Company. Orange County Business Journal. 20-26 November 2006. Page A-25. Mulroy is a shareholder of Stradling Yocca Carlson & Rauth.