Earn-Out Period
The specific time frame during which the earn-out provisions are measured, determining whether the seller will receive additional payments based on the performance of the business post-acquisition.
Implications
The timeframe during which the performance criteria for an earnout are measured, determining the period over which the seller can earn additional compensation based on the business's success post-acquisition.
Example
Example: In the acquisition of a retail chain, the earn-out period is set at three years, during which the seller can earn additional payments if the chain meets specified sales growth targets.
Related Terms
Different from the entire term of the acquisition agreement, the earn-out period specifically refers to the time during which performance-based payments can be earned.
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