earn out(redirected from earns out)
1. verb Of an author, to earn royalties only after the book has exceeded in sales the amount paid as an advance by the publisher prior to publishing. Unfortunately, sales of the book never really took off, so I wasn't able to earn out.
2. verb To exceed in profits the amount paid in an initial investment. The basketball star was paid a fortune to put his name on a new line of sneakers, but many analysts say he will likely never earn out his contract.
3. noun To earn all or some proportion of the purchase price of a business based on the performance of that business over some amount of time after it has been sold. The startup become so wildly successful that the founder earned out the enormous purchase price agreed by Goggle Inc. in just a year and a half.
4. noun A business purchase arrangement in which the seller of a business acquires some portion of the purchase price only if the business performs to a certain level for some amount of time after it has been sold. In this usage, the term is usually hyphenated or spelled as a single word. They want to structure the purchase as an earn-out, as they feel the business model may be too risky to pay a lump sum up front.
Farlex Dictionary of Idioms. © 2015 Farlex, Inc, all rights reserved.