{"ok":true,"canonical_url":"https://dealroom.so/glossary/earnout","api_url":"https://dealroom.so/api/public/glossary/earnout","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"earnout","term":"Earnout","group":"People and paperwork","definition":"Part of the price paid later, only if the business hits agreed targets. Note: earnouts are not allowed in SBA 7(a) deals — use a seller note instead.","what_it_means":"An earnout bridges the gap between what a seller thinks the business is worth and what a buyer is willing to pay today. If the business hits performance targets after closing, the buyer pays the seller an additional amount. The catch for SBA deals: the SBA prohibits earnout structures in 7(a) transactions because the contingent payment is uncertain. If you're buying with SBA financing and the seller wants upside participation, restructure it as a seller note with defined terms instead.","url":"https://dealroom.so/glossary/earnout","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"seller-note","term":"Seller note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"loi","term":"LOI","url":"https://dealroom.so/glossary/loi"},{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"change-of-ownership","term":"Change of ownership","url":"https://dealroom.so/glossary/change-of-ownership"}],"related_questions":[]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Earnout","url":"https://dealroom.so/glossary/earnout","source_type":"DealRoom Data"}}