earn-out-agreement

name	earn-out-agreement
title	Earn-Out Agreement
description	Drafts U.S. M&A earn-out agreements as exhibits to purchase agreements, covering earn-out period, metrics, covenants, reporting, dispute resolution, payment mechanics, tax treatment, and change-of-control outcomes. Use when drafting earn-out provisions, contingent purchase price schedules, post-closing performance payments, EBITDA or revenue targets, earn-out statements, or purchase agreement exhibits.
author	CaseMark
author_url	https://github.com/CaseMark/skills/tree/main/skills/legal/earn-out-agreement
license	Apache-2.0
version	0.1.0
execution_mode	open
jurisdiction	us
practice	corporate
language	en
tags	["agreement","drafting"]

Earn-Out Agreement

Drafts a post-closing contingent purchase price exhibit tied to defined business performance metrics.

Prerequisites

1. Purchase Agreement — executed or near-final, with defined terms and exhibit references
2. Party information — legal names, entity types, jurisdictions, signing authority
3. Earn-out economics — metric(s), targets, thresholds, caps, periods, payment formula
4. Accounting baseline — pre-closing policies and financials for the acquired business
5. Operational terms — integration plan, governance expectations, reporting cadence, access rights
6. Dispute framework — resolution structure, preferred independent accountant
7. Change-of-control and disposition outcomes
8. Tax characterization — withholding positions, purchase price treatment
9. Security requirements — guarantees, escrow, or subordination if applicable

Output Structure

1. Header and Incorporation

• Title: "Earn-Out Agreement"
• Exhibit reference to Purchase Agreement with date and defined terms incorporation
• Parties, effective date, purpose clause tying earn-out to contingent purchase price

2. Definitions

Term	Required Content
Earn-Out Period	Start at Closing Date; end date or number of fiscal periods
Measurement Period	Fiscal year/quarter or stated period
Earn-Out Payment	Cumulative or per-period; aggregate cap
Earn-Out Metric	EBITDA/Revenue/other; GAAP basis; consistent policies; defined adjustments
Threshold / Target / Cap	Minimum, target, maximum
Acquired Business	Entity/division/assets included; allocation rules if integrated
Extraordinary Items	Enumerated inclusions/exclusions
Change of Control	Deal-specific triggers
Earn-Out Statement	Contents and timing
Independent Accountant	Selection method and role

3. Earn-Out Economics