Earn-out in Business Acquisitions: When the Future Becomes a Dispute

Acquisition with an earn-out: bridge between buyer and seller

When selling your business, everything revolves around value. While you, as a seller, want to fully realize the value of your life's work, a buyer often follows the principle of 'seeing is believing'. An earn-out construction serves as the ideal bridge here: part of the purchase price is only paid if the company achieves certain results in the future.

While this instrument covers risks, it is also a source of uncertainty. The future is inherently unpredictable, and as soon as the signatures are on the Share Purchase Agreement (SPA), the real challenge begins. Practice shows that the expectations of buyer and seller often diverge significantly after the transfer.

How does an earn-out work in an acquisition?

In the Share Purchase Agreement (SPA), you stipulate that a variable portion of the purchase price depends on future performance, such as revenue, EBITDA, or net profit. This performance is measured over an agreed period, often the first years following the acquisition.

The success of an earn-out depends entirely on the definition. How is EBITDA calculated? Which costs may or may not be deducted? Because the earn-out formula determines the threshold for payment, the measurement methodology in the SPA must be drafted with accounting precision and in minute detail.

Why does an earn-out almost always lead to a dispute?

The core of almost every earn-out conflict is a divergence of interests after closing. As a seller, you often have no further control over management, while the buyer has full control and directly influences the results. This creates fertile ground for financial manipulation or conflicting interpretations of the calculation basis.

Furthermore, earn-out clauses are often more complex than they initially appear. Small differences in accounting choices can lead to large discrepancies in payouts. Once targets are missed or the buyer refuses to pay, the acquisition process can quickly escalate into a legal tug-of-war.

What was happening in this case at the Amsterdam District Court?

In the case ECLI:NL:RBAMS:2026:1564, the dispute concerned an acquisition where a significant portion of the purchase price was made dependent on specific financial targets for 2022 and 2023. After results in 2023 fell short, the buyer (Beryllium) refused to pay the earn-out.

Sellers went to court to enforce their right to the earn-out. Simultaneously, the buyer counterclaimed, alleging misrepresentation and deceit, demanding millions of euros in damages. The dispute centered on whether the earn-out clauses were applied correctly and whether the buyer was permitted to ignore the performance results.

The ruling of the court

The Amsterdam District Court upheld the claim for payment of the 2023 earn-out. The crucial reason for this was that the buyer had not protested against the calculation presented by the sellers in a timely and correct manner. Under the SPA, the buyer was therefore bound by the calculated earn-out.

The other claims, including those regarding 'rollover' agreements, were dismissed because they were not documented in writing as required by the SPA. The court confirms once again that the literal wording of the SPA and strict adherence to agreed procedures are the only compass in a dispute.

What does this mean for you as a buyer or seller?

• Elaborate the earn-out formula in detail in the SPA — including exact definitions, period, accounting principles, and calculation methodology.
• Clearly agree on how targets are measured and who is responsible for this; remove any room for interpretation.
• Include agreements on the seller's duty of cooperation post-transfer and access to the records of the acquired company.
• Enable objective testing: agree on an independent accountant or expert in case of a dispute over the earn-out calculation.
• Keep an eye on the term and the limitation period (statute of limitations) of the earn-out claim so that rights are not inadvertently lost.
• Engage an M&A lawyer during the acquisition setup; a well-drafted earn-out clause prevents expensive legal procedures later on.

What do you do now?

Is a business acquisition with an earn-out on your agenda, or are you already involved in a legal dispute over earn-out calculations? Do not wait until limitation periods expire or relationships are irreparably damaged. Early legal advice is essential to secure your position and reach an enforceable agreement.

Ruling

This blog post is based on ECLI:NL:RBAMS:2026:1564.