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Benefits of an Earnout

Benefits of an Earnout

When you are acquiring a business, there’s two avenues to approach it with.

Buy the business outright and get it for a better deal with all cash upfront.

Or acquire it at a bigger price with money down and the rest as an earnout.

The earnout allows you to acquire a business and stretch payments over time, building you runway to build the business and enhance it beyond what you acquired it at.

It obviously can be troublesome to have to owe somebody but you allow yourself time to build the business by pouring some capital in to the growth of the business.

An earnout can be done in several ways.

One is a guaranteed earnout paying out $X over Z months.

Another is a performance based earnout where you participate in the % of sales.

Another type of earnout is where you collect in a % of sales or profits that go above baseline. This is where you determine a base level amount whereby anything that goes above it will be attributed to the earnout portion.

Most great earn-out structures can include all of the above to get a deal done.

While the best deals are simple, the best way to get a deal done is to incentivize the seller to feel like they are getting an amazing deal.
If you would like to hop on a call with us to go over things related to acquisitions and general business overview, please schedule a time here. We do a one hour deep dive where we go over your needs as it relates to acquisitions & business expansion, and then we go on the hunt for you to line up a business that fits.




Contact us for your next acquisition:

Email – acquisitions@jarbly.com

Phone – (800) 773-1523

We look forward to helping you with your next buy or sell opportunity.

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Jarbly is a leader in business consulting with expertise in helping with revamped strategies, enhancing valuation, positioning for an exit, and business and real estate sales.

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© 2024 JARBLY LLC is a national brand operating through itself as a Limited Liability Company in the State of FL and works with a number of professionals located throughout the country to provide client related professional services. JARBLY LLC does not guarantee the accuracy of any of the information disclosed in this website or any materials sent including listing information including but not limited to details surrounding a business or listing or property. It is important if you transact with JARBLY LLC in any capacity, you consult a legal professional. The officers, agents, directors, or principals of JARBLY LLC are not licensed attorneys. While the principal of JARBLY LLC is a licensed real estate associate, he is not an attorney. JARBLY LLC is not a registered broker-dealer under U.S. securities laws. For more details on the nature of working together please review our disclaimer at https://jarbly.com/disclaimer and make sure to consult professional legal counsel regarding transactions to be in compliance in accordance with relevant local regulatory and legal requirements.

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