The Hidden Upside of Earn-Outs
“Bob Gilbreath was successful with two deals that included heavy earnouts (paid on future performance),” shares Sam Thompson, a Minneapolis business broker, and the the president of M&A firm Transitions In Business. “In this episode Bob shares how he avoided common mistakes that derail earn outs. He also talks about phantom equity.”
An earn-out is a deal structure where part of the sale price is contingent on the business hitting future performance goals. For many owners, it feels like a gamble—where the payout is uncertain and the risks are high.
But Bob Gilbreath flipped the script.
He navigated two complex earn-outs across two service businesses and turned both into massive financial wins. In this episode of Built to Sell Radio, Bob shares how he transformed the dreaded earn-out into his greatest asset.
You’ll discover how to:
- Structure an earn-out to maximize upside while managing risk.
- Align your team’s incentives to stay focused throughout the earn-out.
- Use “phantom equity” to keep key employees motivated.
- Leverage buyer dynamics to maintain operational independence.
- Navigate the emotional grind of multi-year earn-outs without burning out.
- Avoid common mistakes that derail earn-out deals.
- Reframe the earn-out as an opportunity for personal and professional growth.