How to Track Earnout Potential

How to track earnout potential is a size ledger for the maximum earnout as a percentage of the closing payment (and the dollar cap copied from the PDF), not the earnout-presence tab, not the period tab, not the operating-covenant tab, and not the indemnity-setoff tab. For each signed deal, log whether an earnout is present or silent, the max earnout as a percent of closing payment copied, the dollar cap or schedule copied, the pointer to earnout-tracking, the pointer to earnout-period-tracking, the pointer to earnout-operating-covenant-tracking, and status. Raziel's earnout tracking page is the presence, metric, and paid ledger. This page is earnout potential.

This is not legal, tax, insurance, or investment advice. Raziel does not provide it. Copy the max earnout size from the PDF. Do not paste ABA 2025 earnout presence 18% onto this size row, and do not paste SRS presence 24% as if presence answered how large the earnout can get.

What this ledger is (and is not)

Earnout potential is the maximum contingent consideration expressed as a percentage of the closing payment (and any dollar schedule that sits beside that percentage). Fasken, Private M&A Deal Trends to Watch: Key Takeaways from SRS Acquiom's 2026 Study (May 7, 2026), recapping SRS Acquiom 2026 (more than 2,300 private-target transactions closed 2020 through 2025), prints that the median earnout potential as a percentage of the closing payment climbed from 31% to 34% and matched 2023's mark. Inkvex, How Common Are Earnouts, and How Should They Be Structured? (2025 Data) (May 27, 2026), recapping the same SRS study, prints about 34% of the closing payment. Label Inkvex as a recap of SRS, not a second study. Keep Fasken's presence print (24% of deals, from 22% in 2024; 33% in 2023; historic average roughly 20%) on earnout-tracking. Keep Fasken's length buckets (1-2 years 38%, 1 year or less 23%, 2-3 years 20%) on earnout-period-tracking. Keep ABA 2025 earnout presence 18% (from 26%) on earnout-tracking. Do not paste ABA 18% onto this size row. Those are study snapshots. Your earnout article and any payment schedule control.

This ledger is not earnout-tracking (presence, metric, and whether it was paid), not earnout-period-tracking (how long the window runs), not earnout-operating-covenant-tracking (past practice / maximize), and not earnout-indemnity-setoff-tracking (whether indemnity can reduce an earnout payment). Book presence, period, operating covenant, and setoff as overlay pointers, not as a rewrite of this size row.

Seven columns on one row

Open one row per signed deal. Attach the earnout article, the payment schedule, and pointers to earnout-tracking and earnout-period-tracking.

• Earnout present or silent. Presence pointer. Fasken / DealLawyers SRS 2026: 24% (22% in 2024). ABA 2025: 18% (from 26%). Keep those presence prints on earnout-tracking. Label ABA and SRS separately. Copy presence from your PDF.

• Max earnout as % of closing payment copied. Fasken recapping SRS 2026: median earnout potential climbed from 31% to 34% and matched 2023's mark. Inkvex recapping SRS: about 34% of the closing payment. Copy your PDF percentage. Do not paste 34% onto a silent size paper.

• Dollar cap or installment schedule copied. Copy the maximum dollars, any tiered schedule, and which closing-payment base the percentage uses. Do not invent a Study percentage for the dollar limb beyond the median-potential print.

• Pointer to earnout-period-tracking. Pointer only. Fasken length buckets (38% / 23% / 20%) and Inkvex median about 21 months live on that page. Mark the window beside the size. Do not rewrite that page.

• Pointer to earnout-tracking. Pointer only. That page owns presence, metric, and paid. Keep ABA 18% and SRS 24% there. Mark the pointer. Do not rewrite that page.

• Pointer to earnout-operating-covenant-tracking / setoff. Pointer only. Operating covenants and indemnity setoff are separate ledgers. Mark whether those sentences sit nearby. Do not paste size onto setoff.

• Status. Copied, window open, installment accrued, capped, disputed, paid, or closed. When dollars move, book the date so the signed max is not overwritten by a hoped-for payout.

Copy the clause, not the study percentage

Do not paste 34% onto a silent size paper. Do not paste ABA 18% or SRS 24% onto this size row as if presence answered potential. Do not fold this row into earnout-tracking, earnout-period-tracking, earnout-operating-covenant-tracking, or earnout-indemnity-setoff-tracking. Presence is whether an earnout exists. Period is how long it runs. Operating covenant is how the buyer must run the business. Setoff is whether indemnity can reduce a payment. This row is how large the earnout can get versus the closing payment.

When an installment comes due, log the copied max percentage, the dollar schedule, and whether the payment hit the cap. That trail is what earnout counsel will ask for first.

When the ledger holds

The row holds if the seven cells are copied from the PDFs (or marked missing). It fails when you invent a max percentage, paste 18% or 24% onto this size row, or treat the earnout-presence tab as if it answered the potential question. Raziel's MOIC calculator is only honest if the earnout max and any paid installment have a date and a label. Raziel does not decide your earnout size. Copy the seven columns.