In an earnout agreement, the acquirer must directly control the operations of the target firm to ensure the target firm adheres to the terms of the agreement.

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An earnout agreement typically involves additional payments to the sellers based on the future performance of the target firm, but it does not necessarily require the acquirer to directly control the operations of the target firm. The terms are structured around performance milestones, not operational control.

In an Earnout Agreement, the Acquirer Must Directly Control the Operations