Is earnout part of the purchase price?

An earnout can be seen as part of a purchase price of the sale of an asset, as an amount over the down payment which may be paid to the seller if performance conditions are met.

What is a reverse earnout?

A purchaser may pay the maximum amount of cash for an asset, and be repaid an amount by the seller if a business does not meet predetermined criteria.

How is an earnout treated on taxes?

Always consult with a tax professional when trying to understand what tax implications exist in a deal. Any funds from the sale of an asset may be seen as capital gains or losses for a seller.

What’s the difference between contingent consideration and earnout?

These terms are often used interchangeably.

About the Author

Kal Salem

Kal Salem

MA Accounting - Arizona State University

A CPA and finance professional working with small businesses to educate owners and grow alongside their businesses. Kal started his career in public accounting supporting SEC, regulatory, and both internal and external audits. He holds a Masters in Accounting and a BS in Supply Chain Management. Owner at Salem CPA...

More about me

Related Articles

Show More