M&A
Earn-Out
Reviewed by iGaming Times editorial teamLast reviewed 24 September 2026
What is Earn-Out?
Deferred acquisition consideration payable only if the acquired business meets agreed performance targets after completion. It bridges a disagreement between buyer and seller about future value.
Key takeaways
- An earn-out is deferred acquisition consideration payable only if the acquired business meets agreed targets after completion.
- It bridges disagreement over value and is common in gambling, where many targets are young, fast-growing and hard to value.
- Headline deal values can include large earn-outs, so the sum paid at completion is the better measure of commitment.
Why it matters
Earn-outs are common in gambling because so many targets are young, fast-growing and hard to value. A seller believes the growth continues and a buyer does not want to pay for it in advance, so part of the price is made contingent. It also keeps founders engaged through a transition.
The structure creates predictable friction. Targets are usually defined on revenue or EBITDA, which gives the seller an incentive to pursue short-term performance and the buyer an incentive to integrate in ways that depress the measure. Disputes over how the acquired business was run during the earn-out period are among the most common in acquisition litigation.
Headline deal values should be read with this in mind. A transaction announced at a large figure may involve a modest sum at completion with the balance deferred, which materially changes what the buyer has actually committed and what the seller is likely to receive.
The bottom line
An earn-out is a disagreement about value written into the contract. Read what is paid on day one before treating the headline number as the price.
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Frequently asked questions
What is an earn-out?
An earn-out is part of an acquisition price that is paid later, and only if the acquired business meets agreed performance targets after completion, usually measured on revenue or EBITDA. It bridges a disagreement between a seller who believes growth will continue and a buyer unwilling to pay for that growth in advance, and it keeps founders engaged through the transition.
Why do earn-outs lead to disputes?
Because the incentives diverge. The seller wants to hit the targets and may push short-term performance, while the buyer may integrate the business in ways that depress the measure, such as moving costs or customers. Arguments over how the acquired business was run during the earn-out period are among the most common in acquisition litigation.
How should earn-outs affect how a deal value is read?
A deal announced at a large headline figure may involve a modest payment at completion, with the balance deferred and contingent on targets. The upfront sum shows what the buyer has actually committed, and the contingent portion shows what the seller might receive if things go to plan. Both should be read before treating the headline number as the price.