Earn-out Trends: Continued

Back in April 2015, we discussed key questions to keep in mind when negotiating earn-outs, and looked at recent trends coming out of the American Bar Association's 2014 Canadian Private Target M&A Deal Points Study (the 2014 ABA Study). As the ABA has now published its 2016 study (the 2016 ABA Study), we thought it may present a good opportunity to revisit the topic and look at some key earn-out trends.

General use of earn-outs

The 2016 ABA Study showed a decrease of earn-out clauses present in the transactions surveyed down to 17% from the 25% level in the 2014 ABA Study, and the 21% level in the American Bar Association's 2012 Canadian Private Target M&A Deal Points Study.