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Earn-outs to bridge gap between negotiation parties – curse or blessing?
Managerial Economics
View Archive Info| Field | Value | |
| Title |
Earn-outs to bridge gap between negotiation parties – curse or blessing?
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| Creator |
Toll, Christian
Rolinck, Jan-Philipp |
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| Subject |
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| Description |
An agreement upon the terms of company transactions is aggravated by the existence of different information levels concerning the negotiation parties; this can be seen as a basic cause for divergent price expectations. Hence, the question is how the existing differences in price expectations of the transaction parties can be handled to reach a consensus, even when there is no area of agreement in the initial round of negotiations. Earn-outs are an interesting approach in overcoming divergent price expectations by making the purchase price dependent on the future performance of the company. However, formulating and implementing earn-outs may have a substantial potential for conflict. The present contribution shows which advantages and disadvantages the transaction parties face if an agreement regarding earn-outs is made.
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| Publisher |
AGH University of Science and Technology Press.
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| Contributor |
—
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| Date |
2017-09-28
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
https://journals.agh.edu.pl/manage/article/view/2663
10.7494/manage.2017.18.1.103 |
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| Source |
Managerial Economics; Vol 18, No 1 (2017); 103
1898-1143 |
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| Language |
eng
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| Relation |
https://journals.agh.edu.pl/manage/article/view/2663/1800
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| Rights |
Copyright (c) 2017 Managerial Economics
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