# Earnout

*Corporate Finance & M&A — Finicade finance glossary*

An earnout pays part of a purchase price later, contingent on the acquired business hitting targets. It bridges a valuation gap by letting the seller prove their forecast rather than argue it. It is also the single most litigated feature of private M&A, because the buyer now controls the business generating the metric — and every decision that helps integration can quietly reduce what the seller is owed.

**Also known as:** contingent consideration, deferred consideration

**Related terms:** [Mergers and Acquisitions (M&A)](https://finicade.com/glossary/mergers-and-acquisitions), [Letter of Intent](https://finicade.com/glossary/letter-of-intent), [Purchase Price Allocation](https://finicade.com/glossary/purchase-price-allocation), [Due Diligence](https://finicade.com/glossary/due-diligence), [Post-Merger Integration](https://finicade.com/glossary/post-merger-integration)

Source: https://finicade.com/glossary/earnout