Use of Earn-Outs to “Bridge” the Valuation Gap

Guest post by Jamie Leigh, Ben Beerle, Ian Nussbaum, and Megan Melbourne of Cooley LLP

There’s an old saying, probably at some point attributed to Abraham Lincoln or Einstein, that a bridge shows no allegiance to either side. It’s a wonderful metaphor and one that dealmakers would be wise to remember when working to construct agreements to solve for divergent views on value. What two parties may have initially viewed as a solid foundation, may fail when tested, plunging those parties into the churning waters of judicial scrutiny.

Continue reading