Latest / The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators
How a Tiny Earnout Cap Saved $200 Million
In 2026, earnouts are common in indie M&A but many fail due to poorly structured caps. This episode examines a real mid-market deal where a $5 million earnout cap on a $50 million target preserved $200 million in buyer value after a post-close patent win. Lucas and Luna break down the earnout mechanics—how caps limit seller upside, protect buyers from overpaying on windfall events, and why the cap size is the single most negotiated term. They walk through the one-in-a-thousand event that triggered the cap: a delayed FDA approval that quintupled the target's addressable market. Specific…
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