Bass, Berry & Sims attorney Tatjana Paterno discussed the increased use of earnouts in  deals, primarily by buyers, to bridge valuation gaps in M&A. The article published by Mergers & Acquisitions outlines how private equity firms are overcoming recent obstacles in the current economic market.

Tatjana told the outlet, “The uncertain economic environment reduced visibility into the anticipated performance of acquisition targets, which resulted in an adjustment of buyer expectations with respect to valuations. Buyers have taken a conservative approach to valuation, offering earnouts to reduce the risk of potential underperformance.”

The full article, “PE Firms Get Creative with Add-on Deal Structures,” was published by Mergers & Acquisitions on June 13 and is available online.