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- Title
PUTTING YOUR MONEY WHERE YOUR MOUTH IS: THE PERFORMANCE OF EARNOUTS IN CORPORATE ACQUISITIONS.
- Authors
Quinn, Brian J. M.
- Abstract
The article discusses earnout mechanism, a contractual provision stating that the seller of a business is to obtain additional future compensation based on the business achieving certain future financial goals, used in corporate merger agreements. It describes the competing hypotheses including adverse selection and uncertainty to illustrate the reliance of parties on earnouts in merger agreements. It presents an interpretation of earnout provision in context of problem of adverse selection.
- Subjects
EARNOUT provisions; MERGERS &; acquisitions; ADVERSE selection (Commerce); UNCERTAINTY; CORPORATE profits
- Publication
University of Cincinnati Law Review, 2012, Vol 81, Issue 1, p127
- ISSN
0009-6881
- Publication type
Article