“We expected to see earnouts rise as a response to COVID-19 bumps and slumps, but it’s been interest rates that have really been the driver,” said Simon Harrison, Senior Advisor of Boss Group International. “Earnouts can be a way for sellers to receive their desired valuation, while buyers mitigate their risk. If the business performs well post-acquisition, it’s a win-win.” “The appeal of earnouts has grown as interest rates have climbed,” said Brian Stephens of Legacy Venture Group. “Earnouts provide a way for buyers to defer a portion of the purchase price without incurring additional borrowing costs. Unlike traditional debt financing, there’s no interest expense associated with an earnout, making it an attractive option in a high interest rate environment.”
