Description

Explains the concepts of earnouts and deferred consideration. Participants explore the accounting for cash based and equity based earnouts, calculate the present value of deferred consideration and look at real examples of deal earnouts, including how these are disclosed in company financial statements.

Learning Objectives

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1. Select the definition of earnouts in the context of acquisitions.
2. Identify the forms of deferred consideration.
3. Identify the reason for using earnouts in acquisitions.
4. Determine how deferred consideration is measured on the balance sheet at the transaction date.
5. Analyze and evaluate the impact of a change in the estimated liability for deferred consideration on the income statement.
6. Calculate the amount of total consideration at the time of the acquisition.