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Larger companiesEarnouts
Will you actually collect your earnout? What the data says gets paid
How often earnouts show up at your size, how big they run, how much of one sellers collect, and the terms to settle first.
Selling
8 min read
Figures: SRS Acquiom, deals closed through 2025SRS Acquiom, deals closed 2019 to 2024Read November 12, 2026
Legend Atty · Founder, BridgeBook
Published
How common are earnouts at your size?
The short answer: an earnout is part of your price paid later, and only if the business hits targets after you've handed it over. Treat it as money at risk. In SRS Acquiom's study of 100 deals closed 2021 to mid-2024, sellers had collected 21 cents[1] of each possible dollar so far[2]. That counts the deals that paid nothing.
- Deals of $50,000,000 or less with one
- 29%[3]Deals closed in 2025
- Median size, against the closing payment
- 57%[2]Deals of $50,000,000 or less, 2025
- Median length
- 24 monthsSRS Acquiom, 2024 deals[4]
At this size, earnouts are common. In SRS Acquiom's deals closed in 2025, 29% of those paying $50,000,000 or less at closing had one. In deals paying $25,000,000 or less, it was 35%[3].
Across all of SRS Acquiom's 2025 deals outside life sciences, the share was 24%[2]. So in its deals, the smaller ones carried earnouts more often.
In IBBA and M&A Source's Q2 2026 survey, earnouts were 7%[5] of the price in sales priced $5,000,000 to $50,000,000. Every outside figure on this page is another publisher's, named and dated, and the dollar examples are made up.
How big are they, and how long do they run?
Big enough to matter, and a median of two years. In SRS Acquiom's 2025 deals of $50,000,000 or less, the median earnout could add 57%[2] of the closing payment.
The base there is the cash paid at closing, not the whole price. A made-up example: a buyer pays $10,000,000 at closing and offers up to $5,700,000 more as an earnout. That's the median shape.
The median earnout ran 24 months[4] in SRS Acquiom's 2024 deals. If you stay on to run the company, those are two years under a plan the buyer sets.
How often do earnouts pay?
Often something, and much less than the full amount. SRS Acquiom tracked 100 deals closed 2021 to mid-2024. Some earnout was paid in 59% of them, and 21 cents of each possible dollar had been paid so far[1][2]. Some of those earnouts were still running.
Size makes a difference too. Where anything was paid, the median was 43 cents on the dollar in deals of $50,000,000 or less. Above that, it was 67 cents[2].
A made-up example puts those cents in dollars. Say your offer carries an earnout of up to $3,000,000.
A made-up $3,000,000 earnout, at SRS Acquiom's figures
| Which deals | Paid per dollar | On $3,000,000 | Deals counted |
|---|---|---|---|
| All deals, counting those that paid nothing | 21 cents[1] | $630,000 | 100 deals closed 2021 to mid-2024 |
| Deals of $50,000,000 or less that paid anything, median | 43 cents[2] | $1,290,000 | Deals closed through 2025 |
| Deals over $50,000,000 that paid anything, median | 67 cents[2] | $2,010,000 | Deals closed through 2025 |
Source: SRS Acquiom, Undated page[1]; SRS Acquiom, Deals closed through 2025[2]. Made-up example, not a forecast. The first row and the other two count different deals, so they don't add up to one picture.
At the first row's rate, $630,000 of the $3,000,000 would have arrived. Before you sign, decide the lowest cash at closing you'd take if the earnout paid nothing. Then judge the offer on that number.
What are earnouts measured on?
Mostly revenue. In SRS Acquiom's 2024 deals, 65% of earnouts were measured on revenue and 13% on earnings or EBITDA[4]. EBITDA is yearly profit before interest, taxes, depreciation and amortization.
Revenue is the safer measure for a seller. After closing the buyer sets the costs: new software, a head office charge, a bigger sales team. Each of those can sink a profit target without touching revenue.
Who controls the business while it runs?
The buyer does, and few earnouts come with a promise about how. In SRS Acquiom's 2024 deals, only 3% of earnouts had a promise to run the business as before[4].
5% had a promise to try to maximize the earnout. 10% had a commercially reasonable efforts standard: a promise to run it in a fair, businesslike way[4].
So a promise like those has to be asked for. Without one, ordinary decisions, like moving your best salesperson or cutting a product line, can shrink what the earnout pays.
Can the buyer take claims out of it?
Usually yes. An indemnity claim is the buyer asking you to pay for a loss from a promise in the contract that proved wrong. In 65%[4] of SRS Acquiom's 2024 earnouts, the buyer could take those claims out of earnout payments.
If the buyer sells the business, some earnouts are paid early. In SRS Acquiom's 2024 deals, 39%[4] of earnouts sped up on a sale like that. Ask for it, because a new owner has no reason to chase your targets.
What to ask before you sign
Six terms shape what an earnout pays. Settle them in the letter of intent, the buyer's written offer, while other buyers are still in the room.
| Term | What to ask |
|---|---|
| The measure | Revenue or profit, defined line by line, and who keeps the books. |
| The period | How many months, and whether a miss in one year can be made up in the next. |
| How it's run | A written promise on staff, pricing and products while the earnout runs. |
| Claims | Whether the buyer can take indemnity claims out of earnout payments. |
| A resale | Whether the earnout is paid early if the buyer sells the business. |
| Your job | Whether the earnout is still owed if you're let go. |
BridgeBook's own list. No outside source.
An earnout is one of several ways part of the price arrives later. A note from the buyer is another; here's how seller financing compares with all cash. Shares you keep are a third: how rollover equity works.
What we'd look at first in your offer
With an offer in hand, a dedicated advisor reads the earnout as money that may not come. Three things come first.
- The cash at closing on its own, and whether you'd sell for that.
- Whether the target is one your company has hit before, in its own books.
- Which decisions after closing could move the target, and who makes them.
Then the rest of the walk to the wire: debt, any shortfall in the working capital you agreed to hand over, and money held back. Here's how the price becomes the wire, and the offer to cash calculator does it with your figures.
Questions about earnouts
How do earnouts work?
Part of the price is paid after closing, only if the business hits targets, usually revenue, over a set period.
How often do earnouts get paid?
In 100 deals closed 2021 to mid-2024 that SRS Acquiom tracked, some earnout was paid in 59%. Across them, 21 cents of each possible dollar had been paid so far.
How long do earnouts last?
The median was 24 months in SRS Acquiom's 2024 deals.
Can the buyer take claims out of my earnout?
In 65% of SRS Acquiom's 2024 earnouts, the contract let the buyer offset claims against it. Ask for that clause to be narrow.
Where these numbers come from
- SRS Acquiom, Key Insights from Road-tested Data. Undated page. Read November 12, 2026.
- SRS Acquiom, M&A Earnout and Milestone Trends. Deals closed through 2025. Read November 12, 2026.
- SRS Acquiom, 2026 M&A Deal Terms Special Report: Lower Middle-Market Deals. Deals closed through 2025. Read November 12, 2026.
- SRS Acquiom, 2025 M&A Deal Terms Study. Deals closed 2019 to 2024. Read November 12, 2026.
- IBBA and M&A Source, Market Pulse Q2 2026 Highlights. Second quarter of 2026. Read November 12, 2026.
Outside figures are other publishers', named and dated, and they don't feed our calculator. How we use outside figures
Keep reading
- Larger companiesFrom Sale Price to Cash at ClosingWhat comes off the price in the letter before money reaches your bank, in the order it happens.
- Larger companiesRollover Equity: Keeping a Stake When You SellWhy private equity buyers ask you to keep shares, how much sellers keep, and what sits ahead of you.
- SellingSeller financing vs. all cashHow seller notes, earnouts and holdbacks work, so you can read any offer.
- SellingHow to sell a businessThe steps from a first valuation to closing day, and what to get ready before buyers look.
- Larger companiesAverage Profit Margin by Company SizeWhat companies your size keep as profit, by size and by industry, from tax returns the IRS publishes.
- Larger companiesWhat a $10,000,000 Company Is WorthWhen buyers stop counting your pay as profit, and who can buy a company this size.
One important decision. Two good places to start.
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