Earn-Out and Deferred Consideration Schedule

A schedule for a share or asset purchase agreement where part of the price depends on the business’s future performance – earn-out targets and calculation, accounts and disputes, seller protections, acceleration events, set-off and security.

Editable Word document
5
10pages
Guidance notes included
aml consultancy solutions

Selling or exiting a business

Earn-Out and Deferred Consideration Schedule

About this document

What it’s for

An earn-out is a way of bridging a gap between what a seller thinks the business is worth and what a buyer is willing to pay up front. Part of the price is paid later, if the business hits agreed targets after the sale. Earn-outs are one of the most common sources of disputes after a sale, so the targets, the accounting basis and the rules on how the buyer runs the business must be set out precisely. This schedule does that.

When to use it

  • When agreeing a sale where part of the price is linked to future profit, revenue or other targets
  • For deferred consideration payable in fixed instalments (use Part B only)
  • As a working draft for discussion with solicitors and accountants – earn-outs need professional review

What’s inside

The document is laid out in the sections below. Each one comes with a plain-English guidance note explaining what it does and what to change.

  • Part A – Earn-out: definitions, earn-out payments and worked example, EBITDA adjustments, earn-out accounts and disputes, payment, conduct of the business, acceleration, set-off, security
  • Part B – Fixed deferred consideration

How to complete it

  • Agree the measure (for example EBITDA or revenue), periods and formula, and test it with worked examples
  • Set the accounting policies and the process for preparing and agreeing earn-out accounts
  • Agree the buyer’s operating restrictions, acceleration events and security for payment

Key points to check

  • Tax: the right to an earn-out can be treated as part of the sale price or as employment income if linked to continued employment – take advice before agreeing terms
  • Include worked examples in the agreement to show how the formula works

Our templates are professionally structured starting points for UK businesses, not legal advice. For anything complex, unusual or high-value, have your final version checked by a solicitor.

Included in the pack

Selling or exiting a business

£20

for every document in this category

Editable Microsoft Word files

Guidance notes in every document

Written for UK businesses

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