S&P Capital IQ Pro | Private equity leans more heavily on earnouts in exit deals

In an article for S&P Capital IQ Pro, White & Case partner Jalpit Amin discusses the growing use of earnout structures in private equity exits.

The article examines how the number of private equity earnout deal structures has reached their highest level in at least five years, driven by efforts to bridge valuation gaps and manage uncertainty in an evolving economic environment.

Jalpit notes that factors including "unrealistic valuations" paid during prior deal cycles and uncertainty around issues such as AI disruption are making it more difficult for sellers to achieve their target exit valuations. As a result, he observes that "earnouts are the easiest way to bridge that valuation gap."

Read the full article here.

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