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Earnout Agreement Template for Indonesia

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Key Requirements PROMPT example:

Earnout Agreement

"I need an Earnout Agreement for the acquisition of an Indonesian e-commerce company, where the earnout payments will be based on EBITDA targets over three years, with a maximum total earnout of IDR 50 billion and special provisions for maintaining key management personnel."

Document background
The Earnout Agreement is a crucial document in merger and acquisition transactions where part of the purchase price is contingent on the target company's future performance. This document type is particularly relevant in the Indonesian market where business valuations can be complex and market conditions volatile. The agreement is designed to bridge valuation gaps between buyers and sellers while complying with Indonesian regulatory requirements, including Law No. 40 of 2007 on Limited Liability Companies and relevant OJK regulations. It typically includes detailed mechanisms for calculating earnout payments, operating covenants, and dispute resolution procedures, all structured within the framework of Indonesian corporate and contract law. The document is especially important in transactions involving high-growth companies, companies in emerging sectors, or businesses with uncertain future performance.
Suggested Sections

1. Parties: Identification of the buyer, seller, and any guarantors

2. Background: Context of the transaction, including reference to the main purchase agreement

3. Definitions: Key terms used throughout the agreement, including financial metrics and calculation methods

4. Earnout Period: Duration of the earnout period and any potential extensions or early termination provisions

5. Earnout Calculation: Detailed methodology for calculating earnout payments, including relevant financial metrics and targets

6. Payment Terms: Timing, currency, and method of earnout payments, including any minimum or maximum amounts

7. Business Operation Requirements: Obligations regarding the operation of the business during the earnout period

8. Financial Statements and Reporting: Requirements for financial reporting and access to information

9. Dispute Resolution: Process for resolving disagreements about calculations or payments

10. Representations and Warranties: Standard assurances from both parties

11. Confidentiality: Protection of sensitive business information

12. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction details

13. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment

Optional Sections

1. Tax Provisions: Include when specific tax treatment needs to be agreed upon between parties

2. Security Arrangements: Include when security for earnout payments is required

3. Employee Retention: Include when key employee retention is critical to achieving earnout targets

4. Non-Competition: Include when seller's future activities need to be restricted

5. Force Majeure: Include when specific events that could impact earnout calculations need to be addressed

6. Parent Company Guarantee: Include when parent company guarantee is required for either party

7. Currency Exchange Provisions: Include when payments involve multiple currencies

Suggested Schedules

1. Schedule 1 - Earnout Calculation Examples: Detailed examples of how earnout calculations will work in practice

2. Schedule 2 - Financial Metrics Definitions: Detailed definitions of financial metrics used in calculations

3. Schedule 3 - Excluded Items: List of items to be excluded from earnout calculations

4. Schedule 4 - Accounting Principles: Specific accounting principles to be applied

5. Schedule 5 - Form of Earnout Statement: Template for periodic earnout calculations and reporting

6. Schedule 6 - Key Personnel: List of key personnel critical to achieving earnout targets

7. Appendix A - Business Plan: Agreed business plan for the earnout period

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions




















































Clauses
































Relevant Industries

Technology

Manufacturing

Consumer Goods

Healthcare

Professional Services

Mining

Energy

Real Estate

Agriculture

E-commerce

Financial Services

Telecommunications

Relevant Teams

Legal

Finance

Mergers & Acquisitions

Corporate Development

Compliance

Risk Management

Business Development

Treasury

Tax

Corporate Strategy

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Head of Mergers & Acquisitions

Corporate Development Director

Finance Director

Legal Director

Business Development Manager

Financial Controller

Corporate Lawyer

Investment Manager

Transaction Advisory Manager

Integration Manager

Risk Manager

Compliance Officer

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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