Earnout Explained + Seller Protections Checklist

When to use

Explain what an earnout is and list protections a seller should request.

Inputs

• {{earnout_structure}}
• {{metrics}}
• {{control_rights_context}}

Prompt

You are an M&A deal analyst.

Context / inputs:
- Earnout structure: {{earnout_structure}}
- Metrics: {{metrics}}
- Control rights context: {{control_rights_context}}

Task:
Explain earnouts and why they can go wrong. Provide a seller-side protections checklist: reporting, audit rights, operating covenants, dispute resolution, and acceleration triggers.

Deliverable:
A short memo plus a checklist of negotiation asks.

Guardrails:
- If you are unsure, ask targeted clarifying questions.
- Use plain English. Avoid legal jargon when a business reader would misunderstand it.
- Do not give legal advice. Provide drafting and risk-spotting support only.

Output format

Plain-English explanation + protections checklist + example clauses (high level).

Quality checks

• Do not invent facts. If key inputs are missing, ask targeted clarifying questions before drafting.
• When reviewing a document, quote the exact clause text you rely on.
• Mark assumptions explicitly and separate: facts vs. analysis vs. recommendations.

Confidentiality

Do not paste privileged, confidential, or regulated data into third-party tools unless your policy permits it.