M&A
Earn-out. How do you avoid two definitions of the same result?
Starting point
Before negotiating percentages, run a sample calculation on real data. Agree whether the metric is revenue, margin or another outcome, and which items adjust the base. Consider reorganisations, intra-group sales and transfers of customers.
What to agree in practice
Agree data access, the deadline for the calculation and a process for raising objections. Test the procedure with a scenario where the parties disagree on a material item. That shows whether there is a clear route to settlement.