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Earn Out Agreement

Draft M&A Earn-Out Agreements in Minutes, Not Hours

15 minutes with CaseMark

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Upload your documents and get a finished work product in minutes. New accounts get $5 free to run their first skill.

15 minutes with CaseMark

What you'll need

  • Purchase Agreement

SOC 2 Type II · HIPAA compliant · $5 free credit

Workflow

Overview

Drafting earn-out agreements manually requires hours of careful attention to payment formulas, operational covenants, and dispute resolution mechanisms—all while ensuring consistency with the main purchase agreement. Corporate attorneys spend 4-6 hours navigating complex EBITDA calculations, negotiating business conduct provisions, and drafting acceleration clauses that protect both parties. The risk of inconsistent definitions or misaligned payment schedules can derail deals or create costly disputes.

Drafting earn-out agreements requires balancing complex financial calculations, operational controls, and dispute resolution mechanisms while protecting both parties' interests. Manual drafting takes 6-10 hours and risks inconsistencies between the earn-out terms and the main purchase agreement, potentially leading to costly disputes over contingent payments.

CaseMark automatically generates comprehensive, legally sound earn-out agreements tailored to your M&A transaction. Our AI analyzes your purchase agreement and deal terms to draft precise calculation methodologies, balanced operational covenants, robust verification procedures, and clear dispute resolution mechanisms in minutes.

How it works

  1. 1. Upload your documents

  2. 2. AI analyzes and extracts key information

  3. 3. Review and customize the generated content

  4. 4. Export in your preferred format (DOCX, PDF)

What you get

  • Document Title and Reference

  • Definitions (Earn-Out Period, Payment, EBITDA, etc.)

  • Earn-Out Payment Calculation Methodology

  • Payment Schedule with EBITDA Targets

  • Operational Covenants and Business Conduct

  • Access to Information Provisions

  • Earn-Out Statement Requirements

  • Dispute Resolution Procedures

  • Payment Timing and Mechanics

  • Acceleration Provisions

  • Nature of Rights Clause

What it handles

  • Document Title and Reference

  • Definitions (Earn-Out Period, Payment, EBITDA, etc.)

  • Earn-Out Payment Calculation Methodology

  • Payment Schedule with EBITDA Targets

  • Operational Covenants and Business Conduct

  • Access to Information Provisions

  • Earn-Out Statement Requirements

  • Dispute Resolution Procedures

  • Payment Timing and Mechanics

  • Acceleration Provisions

  • Nature of Rights Clause

Required documents

  • Purchase Agreement

    Main acquisition agreement containing base deal terms, party information, and closing provisions

    PDF, DOCX

Supporting documents

  • Term Sheet or Letter of Intent

    Initial deal terms outlining proposed earn-out structure and performance metrics

    PDF, DOCX

  • Historical Financial Statements

    Target company financials to establish baseline performance and calculation methodologies

    PDF, XLSX

  • Due Diligence Reports

    Business analysis and projections relevant to earn-out target setting

    PDF, DOCX

Why teams use it

Generate complete earn-out agreements with payment schedules, covenants, and dispute resolution in 12 minutes

Ensure consistency between earn-out provisions and main purchase agreement terms

Automate complex EBITDA-based payment calculations with customizable target tables

Include market-standard operational covenants and acceleration provisions

Reduce drafting time by 95% while maintaining deal-specific customization

Questions

What information do I need to provide to generate an earn-out agreement?

Upload your purchase agreement and CaseMark will extract party information, deal structure, and closing terms. You'll specify the earn-out period, performance metrics (EBITDA, revenue, etc.), payment targets or formulas, and any special operational requirements. The AI will draft comprehensive provisions around these parameters, including calculation methodologies, verification rights, and dispute resolution procedures.

How does the AI handle complex earn-out calculation formulas?

CaseMark drafts detailed calculation methodologies including tiered structures, sliding scales, thresholds, and caps. The AI defines the financial metric with precision, specifies GAAP adjustments and exclusions, addresses extraordinary items, and provides worked examples. You can customize whether payments are binary, linear, or formula-based across single or multiple measurement periods.

Can the agreement protect the seller's ability to earn payments after closing?

Yes, CaseMark includes comprehensive operational covenants requiring the buyer to operate the business consistent with past practice and prohibiting actions intended to reduce earn-out payments. The AI drafts provisions addressing staffing levels, overhead allocations, customer transfers, and material business decisions, with appropriate consent or notice requirements balancing buyer control and seller protection.

What dispute resolution mechanisms are included in the agreement?

The agreement includes a multi-tiered process: initial good-faith negotiation between the parties, followed by submission of unresolved items to an independent accounting firm for binding determination. CaseMark drafts detailed procedures for objections to earn-out statements, selection of the accounting firm, scope of review, timing requirements, and cost allocation based on which party prevails.

How does the agreement handle change of control or sale of the acquired business?

CaseMark includes comprehensive provisions addressing extraordinary events during the earn-out period. The AI drafts acceleration clauses, assumption requirements, and security provisions triggered by change of control, business disposition, or material changes. You can customize whether acceleration is mandatory, optional, or based on present value calculations of expected future payments.

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