In Search of the Perfect Earn-Out
This article was originally published in Start Up
The widening gap between expectations of pricing between the buyers and sellers of emerging medical technology companies has increased the number of earn-out transactions, all of which have been different and offered varying degrees of risk and reward. According to Richard Ferrari, a managing director of De Novo Ventures, earn-out transactions are complex and need careful consideration to ensure that they benefit both parties--a poorly structured deal can lead to opportunistic behavior by the acquirer. Ferrari discusses the four stages that define the structure of all earnout transactions
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