The deal
Earnout
Extra shares issued to target holders or the sponsor only if the stock hits agreed levels after closing.
Earnouts bridge a disagreement about value. Target shareholders receive additional shares if the price sustains, say, $12.50 or $15.00 for a period after closing.
Sponsors increasingly place part of their own promote into an earnout, which aligns them with the post-deal share price rather than merely with getting a deal done.
Related terms
See the term in the wild: the screener shows trust size, per-share value and deadlines for every U.S. SPAC, and each profile links to the filings the numbers came from.
Definitions describe market practice and are not investment, legal or tax advice.