A Price With an Earn-out Is a Condition, Not a Promised Amount
How much of the headline amount is fixed cash, and how much depends on future performance? Checkpoints for sellers, drawn from the UK Winvia deal and the Doosan–SK Siltron earn-out.
Summary: The deal amount reported in the press is usually the largest number. What matters to a seller, however, is when, on what conditions, and how much they actually receive. A price with an earn-out (performance-linked consideration paid to the seller additionally if set results are achieved after the acquisition) is not a promised amount but an amount that can be received when conditions are met.
USD figures are converted at KRW 1,450 = USD 1.
£19.1m was not money received all at once
On 28 Sep 2026, Winvia Entertainment, a company listed on the UK’s AIM (the London Stock Exchange’s market for growth companies), announced an agreement to acquire the businesses and key assets of two online prize draw platforms. The headlines carried £19.1m, but the structure is as follows.
| Category | Amount | Condition |
|---|---|---|
| Cash at completion | £15.47m | Paid at closing |
| Deferred consideration | £3.63m | Paid 1 year after completion |
| Earn-out | Cap not disclosed | 2.1x adjusted EBITDA in the second year after acquisition, minus the deferred consideration |
The basis of the price was trailing 12-month adjusted EBITDA (operating cash-generating capacity recalculated after filtering out one-off items) of £4.25m, as agreed with the sellers. Cash at completion is about 3.6x that figure, and fixed cash including the payment due after 1 year is about 4.5x. If second-year EBITDA stays at the current level, the earn-out would be about £5.3m and total consideration about £24.4m. Conversely, if second-year EBITDA falls short of about £1.73m, the earn-out is effectively zero. Even under the same contract, the money received varies by millions of pounds depending on the numbers two years later.
In Korea, too, earn-outs have appeared in large deals. The agreement in Jul 2026 under which Doosan Corporation buys a 70.6% stake in SK Siltron from SK Inc. for $1.6bn includes a clause providing additional payments through 2034 linked to SK Siltron’s results and asset disposals. (View deal record)
An earn-out bridges differing views of the future with conditions
The seller believes things will get better, while the buyer finds it hard to pay now for growth that has not yet been confirmed. By withholding part of the price and paying it when targets are achieved, the buyer reduces initial risk and the seller retains a chance to receive the value they believe in. In practice, however, performance measurement criteria tend to be vague and management control issues easily become entangled, so in Korean deals the refixing method, which lowers the price after the fact if results fall short of the benchmark, tends to be used more often.
Three things sellers should examine separately
First, what is performance measured by. “Adjusted EBITDA” varies depending on what is adjusted. If it is not settled how headquarters overhead and marketing costs are allocated after the acquisition, from when the acquirer’s accounting policies are applied, and where revenue overlapping with the acquirer’s other businesses is attributed, the same results can produce different numbers.
Second, who controls those results. Once the deal closes, the acquirer is the one who decides budgets, personnel, and pricing policy. Since the acquirer must pay more the more the seller achieves the targets, the acquirer may have little incentive to actively help achieve the earn-out. The seller ends up staking part of the consideration on results they do not directly control.
Third, when does the measurement period start. Immediately after an acquisition, integration work such as brand consolidation and system migration is concentrated. If measurement starts at the same time as completion, this period is included in the assessment as is. That the Winvia deal used second-year rather than first-year EBITDA as the basis can also be read as a design intended to avoid this period.
A realistic standard for sellers
The most realistic standard is whether the sale can be decided on the fixed cash received at completion alone. Treat the earn-out as additional consideration that would be nice to receive, and if the fixed amount falls short of the minimum standard, it is worth reconsidering even if the headline amount is large. If you decide to accept an earn-out, the contract should specify in detail the definition and calculation method of the performance metrics, the principles for cost allocation after the acquisition, the authority and budget guaranteed to the seller, the start date of the measurement period, and the verification procedure in case of disagreement.
Frequently asked questions
How do an earn-out and refixing differ?
An earn-out pays more if results are good, while refixing lowers the price after the fact if results fall short of the benchmark. In Korean deals, refixing tends to be used more often.
How should offers with an earn-out be compared?
Rather than the headline amount, it is better to compare them by separating fixed cash at completion, deferred consideration with a set timing, and contingent consideration tied to results.