What an earn-out does

The buyer pays an agreed amount at completion, with a further amount payable later if the acquired business meets defined performance metrics over a specified post-completion period (typically 12 to 36 months). The structure lets the seller share in upside if the business performs, while protecting the buyer if it does not.

Common metrics

  • Revenue. Simple to measure, but vulnerable to buyer-side accounting choices.
  • EBITDA.Closer to "profit", but the seller must trust that the buyer will not load discretionary costs into the acquired business.
  • Customer retention.Useful where the seller's value lies in relationships.
  • Product or contract milestones. Useful for technology or development-stage businesses.

Drafting essentials

  • Precise metric definition."EBITDA" is not a defined term, it must be specified with the accounting policies that apply. A vague definition becomes the next dispute.
  • Audit rights. The seller must have the right to inspect the underlying records during the earn-out period. Otherwise the metric is whatever the buyer says it is.
  • Operating covenants. The buyer typically agrees not to take certain actions during the earn-out period that would suppress the metric, e.g. transferring revenue to other entities, materially altering the cost base, terminating key customer contracts. This is the most heavily-negotiated section.
  • Acceleration triggers.If the buyer changes control again, sells the acquired business, terminates the seller's employment without cause, or breaches the operating covenants, the earn-out typically accelerates and becomes payable in full.
  • Dispute mechanism. Expert determination (for accounting disputes) or arbitration (for broader contractual disputes). Litigation is usually a poor fit because earn-out disputes are technical.

Malaysian-specific considerations

  • Cross-border payment.If the seller is non-resident, cross-border payment of earn-out amounts must comply with Bank Negara Malaysia's Foreign Exchange Policy Notices; confirm specific transactions with your authorised dealer bank.
  • Listed / SC-regulated parties. If the buyer is listed on Bursa or the target is regulated by the Securities Commission, disclosure and shareholder-approval thresholds may apply. Earn-out arrangements with a related party can trigger Bursa related-party transaction rules.

The Firm advises on the legal drafting and mechanics of the earn-out (definitions, accounting policies, dispute resolution, security, anti-avoidance covenants). Stamp duty, tax, and accounting characterisation of contingent consideration are non-legal matters and should be confirmed with your tax adviser and accountant.

Common dispute patterns

  • Allocation of post-completion costs (head-office charges, group services, shared overheads) to the acquired business.
  • Revenue diversion to other group entities so the earn-out metric undershoots.
  • Termination of key sales staff that drives customer retention.
  • Disagreement on the accounting treatment of one-off items.

Most of these disputes can be designed out at drafting stage with tight metric definitions, operating covenants, and a credible dispute mechanism.

Earn-Out 的作用

买方在交割时支付约定金额，并约定在交割后的特定期间（通常 12 至 36 个月）内，若被收购业务达到既定业绩指标，则进一步支付一笔款项。该结构使卖方在业务表现良好时分享上行收益；若表现不佳，买方亦获保护。

常见指标

  • 收入。易于衡量，但易受买方会计选择影响。
  • EBITDA。更接近「利润」，但卖方须信任买方不会将可酌情成本加诸被收购业务。
  • 客户留存率。当卖方价值在于客户关系时合用。
  • 产品或合同里程碑。适用于科技或处于开发阶段之业务。

起草要点

  • 精确的指标定义。"EBITDA" 并非法定术语，必须连同适用之会计政策一并指定。模糊之定义即为下一场争议的种子。
  • 审计权。卖方须有权在 Earn-Out 期内查阅底层会计记录。否则指标即「由买方一言而决」。
  • 经营承诺。买方通常同意在 Earn-Out 期内不采取压低指标之行为，如将收入转移至其他实体、实质性改变成本结构、终止关键客户合同。此节谈判最为激烈。
  • 加速触发。若买方再次变更控制权、转手被收购业务、无故终止卖方雇佣、或违反经营承诺，Earn-Out 通常加速并全额到期。
  • 争议机制。专家裁定（用于会计性争议）或仲裁（用于较广之合同性争议）。诉讼通常并非合适方式，盖 Earn-Out 争议偏技术性。

马来西亚特定考量

  • 跨境支付。若卖方为非居民，跨境支付 Earn-Out 须遵守马来西亚国家银行（BNM）之外汇政策通告，具体交易请向您的授权交易银行确认。
  • 上市公司／SC 监管方。若买方为 Bursa 上市公司、或标的受 SC 监管，披露与股东批准门槛可能适用。与关联方之 Earn-Out 安排可能触发 Bursa 关联交易规则。

本所就 Earn-Out 的法律拟定与机制安排（定义、会计政策、争议解决、保证、防规避条款）提供意见。或然对价之印花税、税务与会计定性属法律范畴以外的事项，请与您的税务顾问及会计师确认。

常见争议模式

  • 将交割后成本（总部费用、集团服务、共享间接费用）分配至被收购业务；
  • 将收入转移至集团其他实体，使 Earn-Out 指标低于预期；
  • 终止驱动客户留存之关键销售人员；
  • 对一次性项目之会计处理产生分歧。

多数此类争议可在起草阶段通过严谨之指标定义、经营承诺及可信之争议机制予以规避。