Comments on: Know What You Are Getting With An Earnout http://blog.elitemanda.com/archives/31 Perspectives on Mergers & Acquisitions in California Central Valley Sun, 05 Feb 2012 10:22:06 +0000 http://wordpress.org/?v=2.2.1 By: Lake Falconer http://blog.elitemanda.com/archives/31#comment-3368 Lake Falconer Mon, 17 Aug 2009 12:33:40 +0000 http://blog.elitemanda.com/archives/31#comment-3368 Good points on avoiding the "tax bite". A further complication here in the UK is that depending on how it is structured the Vendors may have to take a gamble as how much the earnout will pay out - and pay the tax on that sum up front. Alternatively they can pay the tax when they make the earn out - but this may involve interest payments on overdue sums, and worse still in the current climate the tax regime may have hardened by the time the liability is calculated. So what suits the acquiror may prove to be quite untenable for the vendors from a tax standpoint. http://lake.blogs.com Good points on avoiding the “tax bite”. A further complication here in the UK is that depending on how it is structured the Vendors may have to take a gamble as how much the earnout will pay out - and pay the tax on that sum up front. Alternatively they can pay the tax when they make the earn out - but this may involve interest payments on overdue sums, and worse still in the current climate the tax regime may have hardened by the time the liability is calculated. So what suits the acquiror may prove to be quite untenable for the vendors from a tax standpoint.

http://lake.blogs.com

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