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Offered an earn out sales agreement at 7% of gross profit over five years. No money offered up front.

We've been offered an earn out sales agreement for our service company at 7% of gross profit sales over five years. No cash up front. Owner to remain for a year through transition. Is this in line with industry?

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Answers (1)
Susan J. Tanko-Manogue
Susan Juanette Tanko P.L.L.C, WCI Broker

This is not normal and is typically offered when the Buyer is skittish about sales in the future. This is a negative incentive for a Buyer - he has no reason to reach the goal. Risky for the Seller. Need more details. Feel free to call me at 602-373-4637. Susan

Feb 10, 2015

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