Authors: Jason Banack, Mandi Deren-Dube and Tyson Breitkreutz

If done properly, earn-out provisions can be a useful tool for transacting parties. However, care must be taken to address potential risks that could arise after the execution of an agreement. This paper addresses considerations counsel should be aware of when drafting earn-out provisions and accounting issues that may impact earn-out provisions. It also provides a brief review of recent case law which illustrates the importance of addressing these areas of importance when drafting the agreement.

This paper is part of a collection presented at LESA’s Commercial Contract Teardown program in Edmonton on December 11, 2024.