Private Equity Co-chair Gregory Fine spoke to S&P Global about the increased number of earnout provisions in M&A when the seller is a private equity firm. Gregory said, "Tighter lending conditions are an additional factor driving the rising use of earnout provisions in 2023. Earnouts come into play when the buyer can't get 100% there between its equity check and the debt financing, helping to close the gap between the buyer's offer and the seller's asking price."

Source

S&P Global