Negotiations over our earnout structure have stalled because we do not trust the buyer's post-close growth projections, and they think we are sandbagging our current performance. How do we use the Trust Equation to get past this defensive posturing and rebuild momentum?

Question

Tyler Smith · Accepted Answer

Earnout negotiations frequently stall because both sides retreat to defensive, adversarial positions. The buyer believes you are exaggerating your pipeline, and you believe the buyer is sandbagging their post-close capabilities to avoid paying you out. To break this logjam, you must apply the Trust Equation.

The Trust Equation states that trust is built on credibility, reliability, and intimacy, divided by self-orientation. When negotiations stall, it is usually because self-orientation is too high. Both sides are focused entirely on protecting their own downside.

To reset the dynamic, use the Trust Creation Process. Start by openly acknowledging the elephant in the room. Address the mutual skepticism directly in your next meeting. Frame the problem not as a battle over dollars, but as a shared challenge of managing post-close uncertainty.

Once you lower your self-orientation, you can collaborative-source solutions. Offer transparency by sharing real-time pipeline data and historical conversion rates to boost your credibility. In return, ask the buyer to share their integration roadmap and specific resource commitments to prove their reliability. By shifting the focus from a zero-sum battle to a collaborative planning session, you can design a balanced earnout structure that rewards real growth while protecting both parties from unfair outcomes.