--- title: "Earn-Out, Definition | MedTech Terms" description: "Acquisition consideration paid contingently after closing based on achievement of agreed milestones (regulatory, revenue, or technical)." lang: en json-ld: | { "@context": "https://schema.org", "@graph": [ { "@type": "DefinedTerm", "@id": "https://medtechterms.com/terms/earn-out#term", "name": "Earn-Out", "alternateName": [ "Contingent value right", "CVR", "Milestone consideration" ], "description": "An earn-out is a portion of acquisition consideration paid after closing only if the acquired business achieves agreed milestones, typically FDA approval, CE marking, revenue thresholds, integration milestones, or specific technical achievements. In MedTech, where regulatory and commercial risk is concentrated in identifiable inflection points, earn-outs are extremely common and may represent 30-60% of total deal value. 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[Home](/) 2. / 3. [Terms](/terms) 4. / 5. [Investment & Finance](/terms?cat=Investment%20%26%20Finance) 6. / 7. Earn-Out [All terms](/terms) Investment & Finance [Startup Lifecycle](/ecosystems/startup-lifecycle) # Earn-Out Acquisition consideration paid contingently after closing based on achievement of agreed milestones (regulatory, revenue, or technical). Reviewed by [Christian Espinosa, Founder, Blue Goat Cyber](/authors/christian-espinosa) Last reviewed May 9, 2026 ## Definition An earn-out is a portion of acquisition consideration paid after closing only if the acquired business achieves agreed milestones, typically FDA approval, CE marking, revenue thresholds, integration milestones, or specific technical achievements. In MedTech, where regulatory and commercial risk is concentrated in identifiable inflection points, earn-outs are extremely common and may represent 30-60% of total deal value. Earn-outs can take the form of cash payments, contingent value rights (CVRs) traded as securities, or escrowed equity. ## What this means in practice Earn-out disputes are one of the most litigated areas of [M&A](/terms/m-and-a). Common flashpoints: who controls the post-close business decisions that drive milestones, whether buyer must use commercially reasonable efforts, and how revenue is measured. Common pitfalls - • Drafting earn-out triggers loosely so the buyer can de-prioritize the program post-close. - • Failing to negotiate operating covenants that protect the path to earn-out. ## Related terms Grouped by theme ### Editor's picks · Hand-selected related concepts [ Investment & Finance Exit Multiple Valuation ratio applied at exit, e.g., enterprise value to revenue. ](/terms/exit-multiple)[ Investment & Finance Mergers and Acquisitions(M&A) Transactions in which one company acquires or combines with another, the dominant MedTech exit path, typically a strategic acquisition by an established player. ](/terms/m-and-a)[ Investment & Finance Milestone Payment Contingent payment triggered by a defined event in a partnership, M&A, or financing. ](/terms/milestone-payment)[ Investment & Finance Milestone-Based Tranche Investment paid in installments triggered by predefined milestones. ](/terms/milestone-tranche) ### More in Investment & Finance · Same category [ Investment & Finance 409A Valuation An independent fair-market-value appraisal of common stock used to set tax-compliant strike prices for employee stock options. ](/terms/409a-valuation)[ Investment & Finance Anti-Dilution Protection Adjustment that protects investors if the company raises a future round at a lower price. ](/terms/anti-dilution)[ Investment & Finance Bridge Round Interim financing between priced rounds, usually convertible. ](/terms/bridge-round)[ Investment & Finance Burn Rate Rate at which a company spends cash, typically expressed monthly. ](/terms/burn-rate) Cited by Where this term appears across MedTech Terms. Ecosystems (1) - [Startup Lifecycle](/ecosystems/startup-lifecycle) ## Primary references 3 sources Link health: 3 verified · last checked 2026-06-20 ABA· 1 NVCA· 1 SVB· 1 1. [1 ABA M&A Committee, Earnouts Verified ABA · americanbar.org ](https://www.americanbar.org/groups/business_law/resources/business-lawyer/) 2. [2 NVCA Model Merger Agreement Verified NVCA · nvca.org ](https://nvca.org/model-legal-documents/) 3. [3 Silicon Valley Bank - Healthcare Reports Verified SVB · svb.com ](https://www.svb.com/trends-insights/) Inline markers like \[1\] jump to the matching reference above. Sponsor note ### Diligencing a MedTech cybersecurity posture? Blue Goat Cyber supports investors and acquirers with cybersecurity diligence on connected MedTech assets. [Book a 30-minute discovery session](https://go.bluegoatcyber.com/meetings/blue-goat-cyber/discovery-session) - No obligation - Expert-led from minute one - NDA available on request MedTech Terms is a community resource sponsored by [Blue Goat Cyber](https://bluegoatcyber.com). Definitions are independent of any vendor. On this term Category Investment & Finance Sources 3 Updated 5/9/2026 [Compare with another term](/compare?a=earn-out) Learn in 60 seconds Card Lesson Quiz Acquisition consideration paid contingently after closing based on achievement of agreed milestones (regulatory, revenue, or technical). - · Earn-out disputes are one of the most litigated areas of M&A. - · Common flashpoints: who controls the post-close business decisions that drive milestones, whether buyer must use commercially reasonable efforts, and how revenue is measured. - · In MedTech, where regulatory and commercial risk is concentrated in identifiable inflection points, earn-outs are extremely common and may represent 30-60% of total deal value. Remember this Watch out: Drafting earn-out triggers loosely so the buyer can de-prioritize the program post-close. Related terms - [Mergers and Acquisitions(M&A) ](/terms/m-and-a) - [Milestone Payment ](/terms/milestone-payment) - [Milestone-Based Tranche ](/terms/milestone-tranche) - [Exit Multiple ](/terms/exit-multiple) You may also need Auto-suggested from Investment & Finance and shared keywords. - [Strategic Acquisition ](/terms/acquisition) - [Liquidity Event ](/terms/liquidity-event) - [Initial Public Offering(IPO) ](/terms/ipo) - [Due Diligence ](/terms/due-diligence) - [Royalty Financing ](/terms/royalty-financing) - [Series A / B / C Financing Rounds ](/terms/series-funding) [All Investment & Finance terms](/terms?cat=Investment%20%26%20Finance) MedTech Terms An authoritative, plain-language reference for the regulatory, quality, cybersecurity, and software terms that shape modern medical devices. 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