The Earnout Trap in Small Deal Pricing

Most business owners think a higher EBITDA multiple means a richer exit. But in this episode, Lucas and Luna dig into why the actual multiple paid often matters less than how the deal is structured — specifically the earnout. They walk through a real 2026 case where a boutique IT staffing firm agreed to a headline multiple of 7 times EBITDA with a heavy earnout component, only to see the buyer lean on the owner to push revenue into the earnout period, dragging down the final payout. They break down how earnouts shift risk from buyer to seller, why they're now baked into nearly half of all small deals under $10 million, and the structural red flags sellers should watch for before signing — like annual repricing, non-compete restrictions that throttle sales, and vague working-capital targets. Lucas offers a practical rule of thumb: if an earnout is on the table, assume you'll collect sixty cents on the dollar, and price your base consideration accordingly. The tone is sharp, grounded in real numbers, and aimed at owners who want to negotiate like they've been through a deal before. #Earnout #BusinessSale #MergersAndAcquisitions #EBITDA #DealStructure #SellerFinance #SmallBusiness #ExitPlanning #Negotiation #ITStaffing #RiskManagement #Valuation #BusinessBroker #PrivateSale #BusinessPodcast #FexingoBusiness #Business #Finance Keep every episode free: buymeacoffee.com/fexingo