Earn-out clauses are widely used in M&A transactions to bridge valuation gaps between buyers and sellers by linking part of the purchase price to the future performance of the business. While they may help facilitate a transaction, they also create a significant tension: after closing, sellers remain economically exposed, while buyers control the decisions that may affect whether the agreed targets are achieved.
Our specialists João Carlos Anderson Corrêa de Mendonça, Pedro Henrique de Oliveira Fontes and Cindy Massesine Pimentel Canova, from our Corporate and M&A practice, examine this imbalance, the evidentiary challenges sellers face in Brazil and the contractual mechanisms that can mitigate these risks, in an article published by Legalink, an international network of independent law firms recognised by Chambers. Read the full article: Read the full article here.
