Earn-Out Litigation

Sometimes, the only way to reach an agreed-upon price for the sale of a business you’ve built is through an earn-out provision. Earn-outs allow the seller to get the highest negotiated price only after the triggering of some targeted thing, which is typically the post-closing performance of the business. Problematically, the buyer controls the business and the data used for the earn-out calculations. That is why it has been said that “an earn-out provision often converts today’s disagreement over price into tomorrow’s litigation over the outcome.” Vice Chancellor Laster, Airborne Health, Inc. v. Squid Soap, LP, Delaware Court of Chancery.

The litigators at the Jacobs Law Group understand the factors that some people use to circumvent their earn-out obligations. We also have a keen understanding of the machinations others may utilize in an attempt to effect an earn-out. Our business acumen coupled with our seasoned courtroom experience makes the Jacobs Law Group a force to be reckoned with when our clients are faced with an earn-out litigation. We are committed to vindicating our clients’ rights and ensuring them the benefit of the deal they made. We work closely with our clients to create a strategy to most effectively meet their business objectives. We have strong relationships with a broad network of financial, accounting, and other industry experts whose participation in our clients’ dispute may be instrumental in proving whether and how the earn-out conditions were met.

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