A prospective buyer wants to carve out our largest account representing eighteen percent of revenue and pay for it via a contingent earnout rather than paying our full headline multiple at close. How should we push back against this deal structure?

Question

Tyler Smith · Accepted Answer

Buyers propose this structure when they want you to shoulder all account retention risk while they take full operational control. If you accept a contingent earnout on a specific customer, you surrender the account management, pricing power, and delivery quality to someone else while keeping 100 percent of the downside.

Do not let the buyer bifurcate your revenue stream. Counter with a structured, time-limited retention indemnity rather than an earnout. Agree to an escrow holdback capped at the specific margin contribution of that single account for twelve months post-close, but tie release strictly to the customer maintaining their historical run rate, provided the buyer does not materially alter pricing, service-level agreements, or delivery staffing.

Simultaneously, leverage your Accountability Chart to prove account durability. Show that the client interface is managed by an Account Director who GWC (Gets it, Wants it, and Capacity to do it) the seat, supported by documented Core Processes, rather than founder relationships. Demonstrate multi-threaded touchpoints across operations, executive oversight, and billing. If the buyer still insists on contingent payments, demand accelerated vesting if the buyer changes key personnel on the account or fails to meet contractual performance standards. You built a cohesive enterprise; do not allow a buyer to dismantle your multiple customer by customer.