Google Killing The 'Earn-out' In Its Acquisitions

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If your company becomes one of Google’s monthly acquisitions, you won’t be tied into an earn-out.

Google is trying to kill its addiction to earn-outs, says Dave Sobota, Google’s director of corporate development, according to the Wall Street Journal:

“Founders tend to get myopic and just focus on (the start-up) to the detriment of what’s better for the business at large,” Sobota said. 

These dynamics can lead to renegotiating the earn-outs or milestones, or even lawsuits, because no matter how much support the acquirer gives the founders, those founders can feel they don’t have enough support, Sobota said.

…”For a variety of reasons we shy away from (earn-outs) now. We tend to have pretty generous packages but they’re time-based, whether in equity or cash, instead of specific milestones,” Sobota said.

Continue reading at the WSJ →

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