What does £600,000 at completion mean on a £1m offer?
In this illustration, £600,000 is due at completion, £250,000 is payable later and £150,000 depends on a performance condition. The three amounts add up to £1m, but only the first falls due at completion before agreed adjustments.
Practical example: Compare a base case with a case where the earn-out pays nothing: the headline falls from £1m to £850,000 before any other adjustments, and only £600,000 is due at closing in both cases. ICAEW: earn-outs in deals.
For example, £600,000 at completion, £250,000 payable later and £150,000 contingent on performance add up to £1m. Only the completion amount falls due at closing in this illustration, before any other agreed adjustments.
Check what can change each part
Ask how completion balances are calculated, what secures the deferred amount and how the earn-out metric is measured. Model a case where the contingent amount pays nothing.
Compare offers on the same basis
Put timing, conditionality and downside scenarios next to headline price. Use your legal advisers to check the actual rights and obligations.