The buyer is offering a three-year earnout based on gross profit targets, but we are worried they will starve our division of marketing capital and sales headcount post-close to intentionally miss the payout. How do we build operational resource commitments directly into the purchase agreement?

Question

Tyler Smith · Accepted Answer

Buyers love to promise operational support but often starve your division post-close to save cash. Protect yourself by writing specific, non-negotiable operational resource commitments into the definitive purchase agreement. Use your EOS® tools to define these needs. Translate your V/TO® three-year picture into a binding resource schedule. Specify exact marketing budgets, minimum sales headcount, and capital expenditure allocations required to hit those gross profit targets. If the buyer fails to fund these defined resources, the agreement should stipulate that the earnout targets are deemed fully achieved for that period. Use your Accountability Chart to lock in the key seats. Identify the exact roles required to deliver the results and require the buyer to maintain those seats with competitive compensation. Do not rely on vague promises of corporate synergy. If they do not fund the seats, they pay the earnout. Run this through a dedicated Thinking Time session before signing the LOI. Convert your operational requirements into clear legal covenants. This ensures you are not left holding the bag while the buyer starves your growth engine.