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Earn-outs

Jo Quelch and Craig Rowlands of KPMG discuss the tax issues which need to be considered when part of the consideration for the purchase of a company will include an 'earn-out'

 
Jo Quelch and Craig Rowlands of KPMG discuss the tax issues which need to be considered when part of the consideration for the purchase of a company will include an 'earn-out'
 
An 'earn-out' is most commonly seen on a sale of a company where part of the vendors' consideration is paid post completion and normally linked to post-completion events. There are several reasons why an earn-out right may be appropriate: for example it may be because the purchaser and vendors' valuations of the company differ or because the purchaser wants to ensure key management remain suitably incentivised post deal. In the...

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