Glossary · Ownership
What is Earn-out
Definition
Part of a sale price paid later, conditional on the business hitting agreed performance targets after completion.
Applies to: US and UK · Reviewed by James Doyle
In practice
Recruitment acquisitions frequently pay 40% to 60% up front with the rest over two or three years against EBIT targets.
The detail that matters is who controls costs during the earn-out period. Shared overhead allocated by the buyer can wipe out a target you would otherwise have hit.
Related terms
Equity stake
The share of a launch business owned by each party. In a backed recruitment launch it defines control, exit proceeds and who decides what.
ReadValuation multiple
The figure applied to profit to value a recruitment business — typically 4x to 7x EBIT, higher for contract-heavy, recurring books.
Read
Put the theory to work.
Model your rates, costs and funding with the calculators built on our own 2025 data.