The Hidden Upside of Earn-Outs (and How to Unlock It)
- Kyle Winder
- Feb 24
- 2 min read
Earn-outs can be risky, but with the right strategy, they can become a financial advantage. Learn how to maximize your upside.
About this Episode
An earn-out is a deal structure where part of the sale price is contingent on the business hitting future performance goals. For many owners, it feels like a gamble—where the payout is uncertain and the risks are high.
But Bob Gilbreath flipped the script.
He navigated two complex earn-outs across two service businesses and turned both into massive financial wins. In this episode of Built to Sell Radio, Bob shares how he transformed the dreaded earn-out into his greatest asset.
You’ll discover how to:
Structure an earn-out to maximize upside while managing risk.
Align your team’s incentives to stay focused throughout the earn-out.
Use “phantom equity” to keep key employees motivated.
Leverage buyer dynamics to maintain operational independence.
Navigate the emotional grind of multi-year earn-outs without burning out.
Avoid common mistakes that derail earn-out deals.
Reframe the earn-out as an opportunity for personal and professional growth.
About Our Guest
Bob Gilbreath
Bob Gilbreath is a seasoned entrepreneur, investor, and author with a track record of two strategic exits and a passion for scaling service-based businesses. As the founder of a growing holding company, Bob is actively backing and mentoring leaders who are ready to build, grow, and exit their companies successfully.
He’s also the author of The Next Evolution of Marketing, where he explores how brands can connect with customers through meaningful marketing. Through his Substack newsletter, Be Hearty, Bob shares raw, unfiltered insights on business success—and more importantly, the failures that shape it.
In this episode, we’ll dive into Bob’s entrepreneurial journey, his approach to building scalable service businesses, and the lessons he’s learned along the way.
Definitions
Due-Diligence: This is a comprehensive appraisal of a business or investment undertaken before a merger, acquisition, or investment. It seeks to validate the information provided and uncover any potential risks or liabilities.
Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.
Roll Over Investor: A rollover investor, in the context of selling a business, refers to an individual or entity that rolls some of their proceeds from the sale with the buyer. This strategy allows the seller to defer capital gains taxes and potentially leverage their expertise or resources in a new venture.
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