The earnout provision – If negotiations stall, consider this …

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Abstract: The recent upsurge in dealership merger and acquisition activity in many parts of the country is expected to continue in 2015. For those dealers thinking about being a seller (or buyer) this year, it’s a good time to think about alternative deal structures that might ease the negotiation process. One strategy to consider when sales negotiations falter is adding an earnout provision to the purchase agreement. This article explains how an earnout works and how, properly executed, it can provide protection for the seller.