Latest / The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators
The Earnout Penalty That Killed a SaaS Payout
Lucas and Luna break down a specific earnout disaster from a real 2022 SaaS acquisition: a $45 million deal where the seller hit every revenue target but walked away with only $12 million after earnout clawbacks, linearization math, and an EBITDA adjustment tied to a single customer's payment terms. They explain the hidden mechanism called the 'earnout penalty' — where buyer-friendly draft language on recurring revenue definition, linearization, and trailing twelve-month (TTM) calculations systematically deflates the earnout pool. The episode walks clause-by-clause through the…
The skinny
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