What to do next
Get the calculation and the underlying records
Most agreements entitle the seller to the buyer's earnout statement and supporting information, and often to an inspection or audit right on a short deadline. Exercise it - accepting a statement without objection can be treated as acceptance.
Test the accounting treatment against the agreement
Earnout disputes frequently turn on allocation of overhead, recognition timing, treatment of one-off costs, or whether post-closing integration expenses were properly charged to the business. Compare the actual treatment to the definitions in the agreement, not to general accounting practice.
Assess how the buyer ran the business
Redirecting sales to an affiliate, changing pricing, cutting the sales team, or deprioritising the acquired products can all suppress an earnout. Document what changed after closing and when - this is the strongest line of argument where it exists.
Observe the objection deadline
Objection windows are short, often measured in weeks from delivery of the statement, and failure to object within them commonly makes the buyer's calculation final and binding.
Follow the escalation path in the agreement
Many earnout clauses require referral to an independent accountant for accounting items, with arbitration or court reserved for interpretation and good-faith disputes. Sending an accounting item to the wrong forum loses time you may not have.
Frequently asked questions
Can the buyer deliberately miss the target?
Where the agreement contains an operating covenant, that is a breach. Without one, an implied duty of good faith may apply, but its scope varies by jurisdiction and it is harder to run.
How long do I have to object?
Often only weeks from delivery of the earnout statement. Missing the window commonly makes the buyer's figure final regardless of merit.
Who decides an accounting disagreement?
Frequently an independent accountant appointed under the agreement, whose determination is final on the items referred. Interpretation disputes usually go to arbitration or court instead.
What lawyer handles this?
A commercial litigator experienced in earnout and completion-accounts disputes, working with forensic accountants. The accounting evidence usually carries the outcome.
This is general information, not legal advice. Laws vary by location and every situation is different — speak with a qualified lawyer about your specific circumstances.