Private Equity & Exit Opps
You're structuring an earnout tied to EBITDA two years post-close. What design details determine whether it protects the buyer or blows up, and how do you treat it in the LBO model?
Model answer
Design details: (1) Metric — revenue is harder to manipulate but ignores profitability; EBITDA aligns with value but invites accounting fights, so the definition (policies frozen at close, treatment…
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