How Earnouts Can Make or Break a Tech Deal

In Tech M&A, earnouts are supposed to bridge the valuation gap between buyers and sellers. But as Lucas and Luna explore in this episode, they often become a source of conflict. Using the recent $1.5 billion acquisition of a cybersecurity startup as a case study, they unpack why 40% of earnouts fail to pay out in full, the accounting headaches they create, and why some acquirers now avoid them entirely. Listeners will learn the three structure types — revenue-based, product-milestone, and retention-based — and why the last one is the most contentious. Lucas shares data from a 2025 study showing that earnout disputes have risen 60% in the last three years, while Luna questions whether the earnout is really a 'goal alignment tool' or just a way for buyers to de-risk their own balance sheets. Whether you're a founder considering an exit or an investor evaluating deal terms, this episode will change how you read an M&A term sheet. #Earnouts #TechM&A #Cybersecurity #StartupExit #AcquisitionStructures #ValuationGap #DealTerms #Founders #PrivateEquity #StrategicBuyers #RevenueTargets #ProductMilestones #RetentionCliffs #MADisputes #Business #Finance #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo