An earn-out is a deal structure where part of your sale proceeds are contingent on hitting future performance goals. Most founders try to avoid them, seeing earn-outs as risky “golden handcuffs” that tie them to the business long after they’ve mentally moved on.
But here’s the reality: Most small businesses will sell with some form of golden handcuffs. Earn-outs remain one of the most common ways acquirers reduce their risk—especially in service businesses or companies with high owner dependency.
While many see them as a trap, Bob Gilbreath saw an opportunity.
In this week’s Built to Sell Radio, Bob shares how he turned two complex earn-outs into massive wins, growing one agency from $10M to $45M under a five-year earn-out and leading another to a $30M payout in just 19 months.
You’ll discover how to:
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Structure an earn-out to maximize upside while managing risk.
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Align your team’s incentives to stay focused through the entire earn-out.
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Use “phantom equity” to keep employees motivated without giving away ownership.
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Avoid common pitfalls that derail earn-out deals.
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Leverage the acquirer’s resources while maintaining operational control.
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Reframe the emotional grind of an earn-out as a personal growth opportunity.
Bob calls it “the adult version of the marshmallow test”—and in both cases, he got the second marshmallow.
Quote of the Week
An earn-out is the adult version of the marshmallow test—it’s all about delayed gratification.
Deals
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Sertifi, a SaaS platform that helps hotels manage contracts, payment details, and transactions, has been acquired by Flywire Corporation (Nasdaq: FLYW) for $330 million, funded through a combination of cash and debt. Sertifi integrates with major hotel property management systems and serves 20,000 hospitality locations. The company is expected to generate $35 million in revenue, with the acquisition price reflecting a revenue multiple of approximately 9.43 times.
