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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."
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
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
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
Technology
Manufacturing
Consumer Goods
Healthcare
Professional Services
Mining
Energy
Real Estate
Agriculture
E-commerce
Financial Services
Telecommunications
Legal
Finance
Mergers & Acquisitions
Corporate Development
Compliance
Risk Management
Business Development
Treasury
Tax
Corporate Strategy
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
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