An earn-in is a deal structure where the buyer acquires an initial minority or majority interest at completion, with the option or obligation to acquire the remaining interest at a later date based on agreed performance triggers or formulas. Earn-ins are less common than earnouts in Australian sub-$20M M&A but are used in situations where the seller wants to retain operational control and equity exposure for a defined transition period.
The pricing mechanism for the second-tranche acquisition is the most consequential drafting point, often based on a multiple of EBITDA at the relevant date or on agreed valuation principles.