2012 Contingent Consideration Study

Given the growth in the use of earn-outs as a mechanism for both closing deals and addressing post-transaction performance uncertainties, Duff & Phelps has published its first 2012 Contingent Consideration Study. The study analyzed 120 transactions that included earn-outs and closed between 2009 and 2011. The study:

  • analyzes earn-out structures and durations,
  • compares the magnitude of earn-outs to upfront payments,
  • discusses trends in connection with the fair value of earn-outs and the related impact of valuation updates on earnings volatility, and
  • identifies differences in earn-out structures and valuation by industry.

This study is a must read for anyone contemplating the use of contingent consideration in an acquisition.

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