Enforcement Quality and the Use of Earnouts in M&A Transactions¶
Viarengo, L., Gatti, S., & Prencipe, A. (2018). Enforcement Quality and the Use of Earnouts in M&A Transactions: International Evidence. Journal of Business Finance & Accounting, 45(3–4), 3-4.
Cited by¶
1 citation across 1 artifact.
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Mechanisms¶
- Earnout, Holdback, or Contingent Contract
- Once part of the price rides on a measured outcome, the party who controls that outcome has reason to manage the metric rather than the underlying value — the classic moral hazard of earnouts, and the source of their notorious disputes.
This sourceDefines earnouts as linking part of an acquisition price to future performance and identifies moral hazard and payout disputes as recurring risks.
- Once part of the price rides on a measured outcome, the party who controls that outcome has reason to manage the metric rather than the underlying value — the classic moral hazard of earnouts, and the source of their notorious disputes.
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Registry ID ref:2274db04041e · see in the full table