Latest / The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators
How the Earnout Trap Strangles M&A Sellers After Close
Episode 76 of The Acquisition Talk digs into the earnout trap—one of the most common and destructive clauses in middle-market M&A. Lucas and Luna walk through the story of a Texas-based industrial parts distributor that sold for $45 million with a $12 million earnout tied to 2025 EBITDA. The earnout failed not because the business stumbled, but because the buyer allocated shared corporate costs to the division, artificially depressing earnings. The seller spent two years and $400,000 in legal fees fighting the calculation, only to settle for $2.8 million on a $12 million target. The hosts…
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