Article on Clumsy Drafting of an Earnout Provision

A common feature of M&A contracts is the “earnout” provision—a provision that specifies that the purchase price will be increased if the business being acquired meets, post-closing, stated financial-performance targets.

If you’re interested in earnout provisions, of if you’d just like to see yet one more example of how lackadaisical drafting can result in litigation, you might want to check out a recent New York Law Journal article entitled “Negotiating Earnout Provisions in Acquisition Pacts.” It’s by Christopher Lamal of the New York City-based Lamal Law Office. Click here to go to a copy.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.