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Drafting an Earn-Out Arrangement

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Experience with legal services for entrepreneurs since 2001
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An incorrect document often provides a false sense of security.
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Mr. Jaime Boogaers
Mr. Jaime Boogaers
Corporate Law
Attorney, 16 years of experience

A legal document must not only be legally correct. Above all, it must align with how the entrepreneur will actually use the document

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Our lawyers and in-house counsel specialize in drafting, reviewing, and amending legal documents and contracts. We look not only at the legal text but also at how you use the document in practice.

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Every business operates differently. That is why we take your industry, customers, working methods, and specific risks into account.

Our facts

  • Active since 2001
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  • Thousands of agreements per year
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from 99.- per document

Do you already have a document, but are unsure if it is still correct? We check content, risks, and practical usability.

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from 199.- per document

Is your document outdated, copied, generated with AI, or no longer suitable? We check and adjust the document.

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  • Delivered within 5 working days, express delivery possible

About us

Our expertise

Our lawyers and in-house counsel specialize in drafting, reviewing, and amending legal documents and contracts. We look not only at the legal text but also at how you use the document in practice.

Custom solutions for your industry

Every business operates differently. That is why we take your industry, customers, working methods, and specific risks into account.

Our facts

  • Active since 2001
  • Lawyers and in-house counsel
  • Fixed rates in advance
  • Tailored legal solutions for entrepreneurs
  • Thousands of agreements per year

Reviews (21)

Latifa

Professionalism was evident from the very first moment. Our industry was taken into account. The service was professional and personal.

Sanae

A lot of time was saved thanks to the efficient intake. We were able to easily add comments to the draft using a convenient system. Our clients respond positively to the clear general terms and conditions.

Tobias

The promise of a quick start-up was absolutely fulfilled. The lawyer managed to strike exactly the right balance between legal density and readability. A party that delivers on what it promises on the website.

Najat

Practical advice that we could use immediately. It was nice that they didn't charge by the hour for a simple extra question. The service was professional and personal.

Nordin

We were in a contentious situation, but the calm start defused the tension. The continuous thinking from the entrepreneur's perspective was a breath of fresh air. These documents will undoubtedly save us a lot of headaches in the future.

Nora

It was a relief to be helped so quickly. We received excellent advice regarding the division of intellectual property rights. The service was professional and personal.

Mila

Communication was direct and efficient, exactly what we were looking for. They provided a watertight confidentiality agreement that perfectly suited our innovations. The end result aligns 100% with our high standards.

Anouar

Scheduling the appointment went very smoothly and quickly. The legal language was strict and forceful where necessary, but lenient where possible. It is clear that they have a passion for entrepreneurship.

Hamza

We had never hired a lawyer before, but this was a very pleasant first experience. The personal involvement made us feel truly supported. The end result aligns 100% with our high standards.

Lucas

The clear explanation at the start of the project was crucial for us. The telephone consultation regarding the final details provided just that little bit of extra confidence. These documents will undoubtedly save us a lot of headaches in the future.

Emre

Action was taken quickly and work was carried out meticulously. The discussion regarding specific non-compete clauses was handled very professionally. Our clients respond positively to the clear general terms and conditions.

Nathalie

There was immediate room for our own input and ideas. The explanation made the document understandable. Our business partners were impressed by the professionalism of the contracts.

Karlijn

We were pleasantly surprised by the proactive initial approach. We didn't just receive a standard template, but true custom work for our general partnership. It is clear that they have a passion for entrepreneurship.

Hanane

The consultation provided immediate clarity. We received an excellent explanation regarding the implications of applicable law in our international contracts. Everything was delivered neatly and on time.

Amine

Our complex question was immediately reduced to the essence. The lawyer pointed out aspects we had not considered ourselves. The final result aligns 100% with our high standards.

Fouad

I couldn't see the wood for the trees, but the first meeting immediately provided clarity. The corrections were implemented lightning-fast in the new version every time. The document was accepted flawlessly by our investors.

Naomi

Professional approach without unnecessarily complicated language. We received a clear explanation of the risks. The quality fully met our expectations.

Jessica

They acted quickly and worked meticulously. The sharpness in the negotiations with our opposing counsel was impressive. It is clear that they have a passion for entrepreneurship.

Rayan

The speed of action pleasantly surprised us. The review gave us more certainty before using the document. These documents will undoubtedly save us a lot of headaches in the future.

Malika

I was spoken to very kindly on the phone. The translation of our core values ​​into the code of conduct was incredibly well done. A reliable partner that strives for perfection in their documents.

Nisrine

We received excellent assistance with our legal questions. The lawyer really took the time to understand our specific SaaS solution before starting to write. The service was professional and personal.

Meet our office

Our ContractCheck, simply explained what can all go wrong.

Why MKB Juristen?

Since 2001, we have been active as a no-nonsense legal firm for entrepreneurs. We quickly get to the heart of the matter: with a thorough assessment, clear answers, and a document that works practically.

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First, see how we work

A legal document requires trust. You see immediately who we are, how we help entrepreneurs, and why we do not work with standard templates.

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What you can expect from us

We translate your situation into a legal document that you can actually use. You won't receive a loose template, but a document tailored to your business, agreements, and risks.

  • A clear roadmap: intake, concept, revision round, and final version
  • Practical explanation on how to use the document
  • Legal attention to liability, payment, and termination
  • Where possible, provide clarity in advance regarding price and delivery time
Are you unsure whether you should have the document drafted, checked, or amended?
During the initial consultation, we will determine the sensible course of action together. Afterward, you will know exactly where you stand.

Why customization?

A legal document only works well if it aligns with your business, agreements, risks, and industry. That is why we do not work with a standard generator, but with legal experts who assess your situation.

  • Prepared for your company
  • Telephone consultation included
  • No standard template
  • Review by legal specialists

What do you get?

You will receive a legal document that is practical and aligns with the agreements you wish to make.

  • Draft document or legal review
  • One adjustment round
  • Clear explanation where necessary
  • Fixed price where possible

The founders of MKB Juristen

Our organization consists of several small teams working within various legal fields. Each legal field has its own senior in-house counsel and/or lawyers.

Denian Wielhouwer

Corporate lawyer in corporate law & business expert

Denian Wielhouwer

Annelore Hendriks

Corporate lawyer, corporate law, administrative law

Annelore Hendriks

Ilja van Driel

Corporate law attorney, employment law

Ilja van Driel

Jaime Boogaers

Corporate law, ICT & privacy law, energy law attorney

Jaime Boogaers
Custom choices

Which choices determine the content?

Before drafting the arrangement, you make a number of substantive choices. These choices determine how much risk each party bears and the likelihood of disputes.

Choice or question Why this matters legally
Which performance measure do you use? Revenue is easy to measure but says little about profit; EBITDA or net profit aligns better with value but is more sensitive to accounting choices.
How long is the earn-out period? A short period provides quick clarity, while a longer period measures sustainable performance but prolongs uncertainty and commitment.
How much control does the seller retain? Greater involvement from the seller protects performance but may conflict with the buyer's desire to manage the business as they see fit.
Do you work with thresholds, ceilings, or a sliding tray? A sliding scale distributes risk evenly; a ceiling protects the buyer, a threshold protects against minor deviations.
What security do you require for payment? An escrow or bank guarantee reduces the risk that the seller ultimately does not receive the promised earn-out amount.
Clauses and provisions

What components belong in an earn-out arrangement?

A workable earn-out arrangement establishes how variable compensation is calculated, measured, and paid out. The components below together form the framework that ensures buyer and seller know where they stand.

Provision Relevant to Legal point of attention
Performance criteria Always Determine the exact metric, for example EBITDA, revenue, or net profit, with an unambiguous definition.
Earn-out period Always Determine the measurement period, usually one to three years after the transfer.
Calculation method Always Describe how the earn-out amount is derived from performance, including any thresholds and ceilings.
Valuation bases Always Agree on the accounting rules to be applied so that the figures are unambiguous.
Payment time and method Always Determine when and how payment will be made and which securities or escrow apply.
Management and control Often Specify the freedom the buyer has in business operations during the earn-out period.
Information and control rights Often Grant the seller access to the relevant records to verify the calculation.
Dispute resolution Recommended Appoint an independent expert or binding advisor for numerical disputes.
Use in practice

How do you use this document correctly?

An earn-out arrangement only works if both parties adhere to and document the agreements throughout the entire period. Follow the steps below to apply the arrangement correctly.

Situation What should you do? Point of attention
When drafting Define performance criteria and valuation bases unambiguously Prevents later discussion about how the figures are determined.
Upon signing Include the provision in or link it to the purchase agreement Ensures that the earn-out is a legal part of the entire transaction.
During the earn-out period Maintain transparent, consistent records Makes the calculation verifiable and substantiates the final amount.
At the end Prepare the calculation and share it with the other party Activates the payment and provides an opportunity to resolve a dispute in a timely manner.
Common mistakes

Common mistakes

In earn-out arrangements, conflicts often arise due to inaccuracies that could easily have been avoided during drafting. Watch out for the following pitfalls.

Wrong Consequence Better approach
Vague performance criteria The parties disagree on what counts and how it is calculated Define the standard and bases exactly, including exceptions.
No agreements regarding control The seller accuses the buyer of undermining the performance Specify which decisions the buyer may make without consultation.
No information rights for the seller The seller cannot verify the calculation and distrusts the result Give the seller access to the relevant figures and documents.
No dispute resolution A difference of opinion leads directly to an expensive procedure Appoint an independent expert or binding advisor in advance.
No security for payment In the event of payment problems, the seller receives nothing Work with escrow, a bank guarantee, or clear settlement.
Risk profile

What is your situation and what do you pay attention to?

The proper structuring of the earn-out depends on your role and the nature of the transaction. Recognize your situation and focus on the associated points of attention.

Risk profile Example Focus in the document
You are a seller and remain involved You still influence the performance yourself during the earn-out period Document your powers and freedom of action in writing.
You are a buyer and want to do business freely You want to integrate and manage the company according to your own discretion Limit the seller's control and choose a robust measure.
The valuation varies widely Buyer and seller fundamentally disagree about the future Use a sliding scale with a threshold and ceiling to share risk.
The company depends on a few customers Losing a major client can negatively impact performance Agree on how special events affect the calculation.
Additional documents

When is this document not enough?

An earn-out arrangement regulates the variable purchase price but does not stand alone. In an acquisition, additional agreements often apply that you record separately.

Situation Supplementary document Why
Situation Related document Explanation
You are selling or buying shares of a private limited company Share purchase agreement The earn-out is part of the purchase price and is included in the transfer itself.
The seller remains as director Management Agreement In this, you set out the role, remuneration, and powers of the seller after the acquisition.
Multiple shareholders continue to collaborate Shareholders' Agreement In this, you regulate control, profit distribution, and exit among the shareholders.
Explanation of this document

Drafting an Earn-Out Arrangement, why?

Not every entrepreneur knows exactly what earn-out arrangements are, when they are needed, and which risks they must cover. Therefore, we explain below what this document entails, what to look out for, and why customized legal solutions are important.

What is an earn-out arrangement?
An earn-out arrangement is the pricing mechanism whereby a portion of the purchase price in a corporate acquisition is made dependent on the future performance of the acquired company after closing. The buyer pays a fixed base amount at closing and an additional earn-out payment if the company achieves certain financial or operational objectives during the agreed earn-out period. The earn-out bridges the valuation gap between buyer and seller: the seller believes the company is worth more than the buyer is willing to pay based on current performance; the earn-out allows future performance to determine who is right. At the same time, an earn-out is one of the most attractive and most conflict-prone acquisition structures: disputes regarding the earn-out calculation after closing are among the longest-lasting and most costly disputes in M&A law. Our lawyers draft an earn-out arrangement for buyers and sellers that watertight defines the earn-out basis and calculation method, correctly establishes the buyer's post-closing obligations not to frustrate the earn-out, and clearly formulates the dispute resolution procedure for earn-out disputes.
How do you define the earn-out basis in a watertight manner?
The earn-out basis —the financial or operational measure on which the earn-out is calculated—is the most critical and most contested provision of the earn-out arrangement. Commonly used bases are: revenue, EBITDA, EBIT, net result, free cash flow, or a combination. Each of these bases has advantages and disadvantages from the perspective of the parties. Revenue is easy to measure but gives the buyer no incentive to optimize profitability. EBITDA is a better performance measure but gives the buyer influence through cost allocations and accounting choices. Net result is the most influenceable by the buyer through financing costs, depreciation, and group allocations. Your earn-out arrangement must accurately define the basis—which costs are included and excluded, how group transactions are treated, and how acquisitions or divestments are handled during the earn-out period—and establish the calculation method in a calculation formula or a detailed conceptual framework. An earn-out definition that does not exclude every accounting discretion for the buyer is a future dispute in the making. Our lawyers formulate an earn-out basis that is watertight for the seller.
As a seller, how do you protect the earn-out from frustration by the buyer?
After closing, the buyer has full control over the operations of the acquired company. Without contractual restrictions, the buyer can frustrate the earn-out by allocating costs to the acquired entity, shifting revenue to other group entities, integrating the company into its own structure thereby rendering separate performance measurement impossible, or managing the company differently than the seller had expected. Your earn-out arrangement must require the buyer to operate the acquired company as an independent entity during the earn-out period, to continue operations in the normal course of business, not to shift revenue or profit to other group entities, and not to apply cost allocations that are not commercially justified. The buyer will want to limit these obligations in order to realize the integration benefits — this is where the most fundamental tension lies in any earn-out negotiation. Our lawyers advise you on earn-out provisions that realistically protect your earning potential as a seller.
How do you handle reporting and audit rights regarding an earn-out?
The earn-out calculation depends entirely on the financial information provided by the buyer regarding the performance of the acquired company after closing. Without a robust reporting obligation and an audit right, the seller has no means to verify the accuracy of the earn-out calculation. Your earn-out arrangement must require the buyer to periodically—quarterly or annually—provide a detailed performance report, prepared in accordance with the agreed accounting principles and verified by the accountant of the acquired entity. The audit right grants the seller the right to have the underlying financial records audited by an independent accountant appointed by him. Upon discovery of an error in the earn-out calculation, the accounting costs are borne by the buyer if the error exceeds a certain threshold. Our lawyers draft a reporting and audit structure that makes the earn-out enforceable.
How do you settle disputes regarding the earn-out calculation?
Earn-out disputes are particularly difficult to resolve through ordinary court proceedings: the judge typically lacks the financial and sector-specific expertise to assess complex earn-out calculations, and the procedure takes too long while the earn-out period has already expired. The most effective dispute resolution procedure for earn-out disputes is binding advice by an independent, specialized accountant—typically a chartered accountant or a forensic accountant—who settles the dispute regarding the earn-out calculation within a specified timeframe. Your earn-out arrangement must set out the procedure for appointing the dispute accountant, define the timeframe for their assessment, and stipulate that their ruling is binding on both parties unless there is a manifest error. Our lawyers formulate a dispute resolution procedure that resolves earn-out disputes quickly, cost-effectively, and expertly.
How does it work at MKBjuristen?
Following an intake regarding the transaction, the valuation gap, and the desired earn-out structure, our lawyers draft an earn-out arrangement that watertight defines the basis and calculation method, correctly establishes the buyer's post-closing obligations not to frustrate the earn-out, formulates the reporting and audit rights in an enforceable manner, and clearly describes the dispute resolution procedure.
Are you unsure whether your document is legally correct? We would be happy to assess the sensible course of action: drafting, reviewing, or amending.
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Why not use a standard document?

A standard document often seems like a quick solution, but usually does not fully align with your company, agreements, risks, and way of working. Our legal experts draft documents that fit your situation.

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Explanation regarding the use of the document

A standard document seems cheap, until it doesn't fit your situation properly. That is why we provide custom legal solutions tailored to your business.

Custom solutions per industry and company

Every business operates differently and faces different legal risks. Therefore, we tailor the document to your industry, customers, agreements, and way of working.

Webshops & e-commerce

Focus on online sales, delivery, returns, complaints, payment, digital products, and consumer regulations.

Business services

Attention to the assignment, additional work, liability, payment, termination, and reliance on client information.

Construction, installation & execution

Attention to planning, delivery, warranties, additional work, materials, delays, and liability risks.

Software, SaaS & digital services

Attention to licenses, availability, support, updates, data, intellectual property, and limitation of liability.

Trade, supply & wholesale

Attention to delivery, transport, payment, retention of title, warranties, delivery times, and international agreements.

Consultants, freelancers & advisors

Attention to scope, best efforts obligations, cancellation, payment, liability, and confidential information.


A legal document only has value if it suits your practice. That is why we look not only at the text, but also at how you use the document in your business.

Common mistakes with legal documents

A legal document often seems simple, but small errors can have major consequences later on. In practice, we see that entrepreneurs run the greatest risk when a document does not align well with their business, agreements, or way of working.

  • Using a standard document that does not suit the company
  • Forgot important agreements regarding payment, delivery, liability, or termination
  • Have a document generated without legal review
  • Continuing to use old documents while the company has changed
  • Not knowing how the document should be used correctly in practice

A legal document only prevents problems if it suits your situation. That is why we look not only at the text, but also at your company, agreements, and risks.

Why is a standard document often not enough?

Because a standard document does not take into account your industry, customers, risks, and specific agreements, important provisions may be missing or not align well with your practice.

Can I create a legal document myself using AI?

AI can assist in creating text, but does not independently assess whether the document is legally appropriate, complete, and usable for your business. Legal review therefore remains important.

When do I need to have my document checked?

Have your document checked if your business has changed, you have new customers or services, you have doubts about existing agreements, or the document has not been updated for a long time.

Will I also receive an explanation about the use of the document?

Yes. We explain how to use the document in practice, what to look out for, and which steps are important to prevent disputes afterwards.

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Annelore Hendriks

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SME Lawyers at the Chamber of Commerce Source: Chamber of Commerce 2019
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