Dashboard: It’s Not That Earnouts Are Bad. It’s That Bad Earnouts Are Bad

Conventional wisdom about selling a business is pretty clear: If at all possible, get your money at closing. Don’t leave a big chunk of the purchase price dependent on the future performance of a business you no longer control. David C. Barnett, who helps people buy and sell businesses, has challenged that conventional wisdom, arguing that earnouts and other forms of deferred payment can sometimes help buyers and sellers get better deals done. Josh Patrick, who has owned and sold businesses himself and advised many other owners through transactions, is more skeptical. Which is why I was kind of ho...