The $40M Earnout That Never Got Paid, and the One That Did | Built to Sell Radio

Garren Hilow bootstrapped Abveris, an antibody discovery business doing $12 million in revenue, and sold it in 2021 for $150 million up front with another $40 million available in an earnout. His team came within one percent of the revenue target. The acquirer said they had missed it, refused to share the accounting behind that conclusion, and dared him to sue. 

Rob Walling sold Drip with 40 percent of his purchase price tied to an earnout and collected all but a fraction of it. 

In this episode of Built to Sell Radio, John Warrillow puts the two founders side by side to work out what actually separated the two outcomes, and you discover how to negotiate an earnout you have a chance of collecting. 

You’ll learn: 

• Why a revenue-based earnout hands the acquirer the calculator, including the right to change how your revenue is recognized partway through the year 

• Walling’s ranking of earnout milestones from worst to best, and the one type he tells founders to refuse outright 

• Why taking more cash at close makes an acquirer less likely to fight you over the back end 

• What a private equity buyer admitted over dinner about how often his firm plans to replace the founder 

• The reporting clause Hilow left out of his agreement, and what its absence cost him 

• How old Slack messages and a verbal instruction to work from home became grounds for a termination with cause 

• Why an acquirer who intends to fold your company into theirs should not be offering an earnout at all 

Show Notes & Links

Connect with Garren on LinkedIn

Connect with Rob on LinkedIn

Definitions

Due-Diligence: This is a comprehensive appraisal of a business or investment undertaken before a merger, acquisition, or investment. It seeks to validate the information provided and uncover any potential risks or liabilities.

Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.

Letter of Intent (LOI): This document outlines the basic terms and conditions of a deal before a formal agreement is drawn up. It serves as a mutual commitment between the buyer and the seller to move forward with the transaction on the agreed-upon terms.

About Our Guest

Rob Walling and Garren Hilow

Rob Walling is a serial entrepreneur who has bootstrapped and sold multiple SaaS startups. He runs the first startup accelerator for SaaS bootstrappers, called TinySeed. Rob has invested in more than 35 startups and wrote one of the foundational books on bootstrapping startups, Start Small, Stay Small.

In addition, his podcast Startups for the Rest of Us has been running for a decade and now has more than 500 episodes and 10 million downloads. Rob has been quoted in dozens of major publications, including: The Wall Street Journal, Forbes, Entrepreneur, and Inc. Magazine.

Garren Hilow is a seasoned entrepreneur and business strategist with a track record of leading high-growth companies through successful exits. As the CEO and founder of multiple ventures, Garren has built a reputation for identifying market opportunities, scaling operations, and driving results with clarity and conviction.

With a background rooted in both startup innovation and corporate leadership, Garren brings deep expertise in mergers and acquisitions, fundraising, and go-to-market strategy. His insights have made him a sought-after advisor and podcast guest for founders navigating the complexities of scaling and selling their businesses.