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| | Ask HN: Earnout Agreements and Terms | | 1 point by cvm on March 14, 2012 | hide | past | favorite | | I am in the process of selling half of my business and part of the payment is based on an earnout agreement. The seller proposed that the earnout payment be based upon "pretax net income" in accordance with GAAP. I am concerned there are some undefined variables that will affect pretax net income. Decisions like whether to capitalizing or expense an item and depreciation schedules, will affect pretax net income and I am sure there are more. What are some of the variables related to pretax net income that I should define upfront so there are no surprises later? I appreciate any advice. |
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