<b>SOP 33: Structuring Earnouts and Holdbacks</b>

<b>SOP 33: Structuring Earnouts and Holdbacks</b>

When the seller's claims outrun what you can verify, don't argue — structure the risk onto them.

— Holdback: retain 10–20% of price in escrow for 60–90 days. Released only if traffic/revenue holds. Covers silent transfer breakage.
— Earnout: pay a portion only if defined revenue targets are hit post-close. Aligns a confident seller with reality.
— Define the metric precisely: which dashboard, which number, measured how, on what date. Vague earnouts = lawsuits.
— Cap and floor: state the maximum payout and the minimum trigger in writing.
— Seller support clause: tie a chunk of payment to a 30–60 day handover and questions-answered SLA.

PASS = a confident seller accepts performance terms. FAIL = a seller who refuses ANY holdback is telling you the numbers won't hold.

Save this — run it every deal.