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What is an "Earn Out"?

Welcome back to my weekly articles on business building. Understanding that the more prepared your business is for a sale, the more, and possibly better, the options that you will have available. As an owner, you always want to have more options available when it is finally time to sell so you can choose the best financial arrangement. If you cannot get what you need for the business, then your financial future will be in jeopardy. In this article I provide an overview of another sale option available to a seller: an Earn Out - including the considerations, risks, rewards, and issues that must be assessed and then accepted, if this is the option chosen.


Most owners get one chance to get it right when they decide to sell, yet most owners cannot sell the business they built (only 1 in 10 are successful) because they did not build a sellable asset. If selling your business to fund your future lifestyle is necessary, ask yourself whether you are prepared or not, and then identify what you need to do to get to where you need to be.

With up to 76% of Canadian businesses reporting that they hope to exit in the next 10 years, being unprepared might cost you both your legacy and your retirement. With only 1 in 10 having a plan, the odds against are not in an owner’s favor.





What is an Earn Out
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