Sell Your Business Now Using Earn Outs

Sell Your Business Now Using Earn Outs

By Robert Contaldo

May 19, 2011

I want to sell my company, but my business is down from the economy.  What should I do? 

You want to sell right?  You have a personal compelling reason to sell, right?  Then what we have to do is find a way for you to do it.  So how do you do it?  One way is to wait.  But you say “I don’t want to wait.”  So we build in an earn out.  An earn out is a contingent payment tied to future performance.  There are  a lot of good ways to do it.  There are a lot of bad ways to do it.  We want to make sure we get one that’s easy to track, and attainable, so that if you do it right you’ll collect the same amount of money today through an earn out that you would if you held it for three, four, or five years.  So you can’t really lose so long as the business performs.  So you may ask “Do I need to stay?” And the answer is “No.”  You can do an earn out and still leave.  So it’s a great vehicle.  I would say the majority of companies we sell right now need an earn out component because everybody’s down.  If you’re down and want to sell your business, that’s the best vehicle to do it.

Watch the full interview on “Is is the Right Time To Sell My Business?”

Posted by Robert Contaldo.