Earn-Out Clauses in UK M&A: A Practical Guide to Drafting, Disputes and HMRC Tax Treatment
A practical guide to earn-out clauses in UK M&A: typical structures (EBITDA, revenue, hybrid), durations and amounts in the lower mid-market, protective covenants every seller needs, HMRC tax treatment under the Marren v Ingles rule, BADR preservation and QCB versus non-QCB elections, and the most frequent sources of post-completion dispute in the English Commercial Court.
## Earn-Outs in UK M&A: A Practitioner's Guide Every M&A lawyer has a love-hate relationship with earn-outs. On the right deal, an earn-out bridges a real gap between buyer scepticism and seller optimism, and it does so with the seller's continuing operational input as the deciding factor. On the wrong deal, it generates two years of post-closing argument, a Commercial Court claim that nobody saw coming, and HMRC questions about whether the deferred consideration is capital or income. I have drafted, negotiated and litigated enough earn-outs to take a clear view: most earn-outs that fail were …