Ƶ

Earnout Agreement for India

Earnout Agreement Template for India

An Earnout Agreement under Indian law is a critical document in merger and acquisition transactions that structures additional purchase price payments based on the target company's future performance. The agreement, governed by Indian contract law and corporate regulations, details the mechanism for calculating and paying earnout consideration, including specific performance metrics, measurement periods, and payment terms. It incorporates provisions for compliance with Indian regulatory requirements, including Companies Act, 2013, Income Tax Act, 1961, and where applicable, SEBI regulations and FEMA requirements for cross-border transactions.

Your data doesn't train Genie's AI

You keep IP ownership of your information

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Download a Standard Template

4.6 / 5
4.8 / 5
Access for free
OR

Alternatively: Run an advanced review of an existing
Earnout Agreement

Let Ƶ's market-leading legal AI identify missing terms, unusual language, compliance issues and more - in just seconds.

What is a Earnout Agreement?

An Earnout Agreement is utilized in merger and acquisition transactions where parties agree to defer a portion of the purchase price, making it contingent on the target business achieving specific performance metrics post-closing. This document is particularly relevant in the Indian market where business valuations may be uncertain or when there's a significant gap between buyer and seller price expectations. The agreement details the earnout mechanism, including performance targets, calculation methods, payment terms, and verification procedures, while ensuring compliance with Indian regulatory requirements including the Companies Act, 2013, Income Tax Act, and relevant SEBI regulations. It's commonly used in high-growth sectors, situations involving founder-led businesses, or when retention of key management is crucial to future success. The document must address specific Indian legal considerations regarding contract enforcement, corporate compliance, tax implications, and where applicable, foreign exchange regulations.

What sections should be included in a Earnout Agreement?

1. Parties: Identification of all parties to the agreement, including the buyer, seller, and any guarantors

2. Background: Context of the transaction, reference to the main purchase agreement, and purpose of the earnout arrangement

3. Definitions and Interpretation: Definitions of key terms including Earnout Period, Target Performance Metrics, Calculation Methods, and Payment Terms

4. Earnout Structure: Detailed explanation of the earnout mechanism, including performance metrics, targets, and calculation methodology

5. Payment Terms: Timing, method, and currency of earnout payments, including any minimum or maximum limits

6. Performance Measurement: Specific methods for measuring and verifying performance metrics, including accounting principles to be applied

7. Seller Protections: Provisions protecting the seller's interest in achieving earnout targets, including operational covenants

8. Verification and Audit Rights: Procedures for verifying calculations and rights to audit relevant financial information

9. Dispute Resolution: Process for resolving disputes related to earnout calculations or payment obligations

10. Tax Provisions: Treatment of earnout payments for tax purposes and allocation of tax responsibilities

11. Confidentiality: Provisions regarding the confidentiality of business information accessed during the earnout period

12. General Provisions: Standard clauses including notices, amendments, governing law, and jurisdiction

What sections are optional to include in a Earnout Agreement?

1. Foreign Exchange Compliance: Required when the agreement involves cross-border payments or foreign parties, detailing FEMA compliance

2. Securities Law Compliance: Necessary when either party is a listed company, addressing SEBI regulations and disclosure requirements

3. Industry-Specific Provisions: Additional provisions required for regulated industries like banking, insurance, or telecommunications

4. Parent Company Guarantee: Included when a parent company guarantee is required to secure earnout payments

5. Change of Control Provisions: Specific provisions addressing the impact of change in control during the earnout period

6. Employee Retention Provisions: Required when the earnout is linked to retention of key employees or management

7. Acceleration Events: Provisions for early payment or adjustment of earnout in specific circumstances like sale or IPO

What schedules should be included in a Earnout Agreement?

1. Schedule 1 - Performance Metrics Definition: Detailed definition and calculation methodology for each performance metric

2. Schedule 2 - Earnout Calculation Examples: Illustrative examples of earnout calculations under different scenarios

3. Schedule 3 - Form of Earnout Statement: Template for periodic earnout calculations and reporting

4. Schedule 4 - Accounting Principles: Specific accounting principles and policies to be applied in calculations

5. Schedule 5 - Excluded Events: List of events that are excluded from impacting earnout calculations

6. Schedule 6 - Key Employee Positions: List of key positions relevant to the earnout if applicable

7. Appendix A - Dispute Resolution Procedure: Detailed procedures for resolving disputes related to earnout calculations

8. Appendix B - Compliance Certificates: Forms of various compliance certificates required under the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

India

Publisher

Ƶ

Document Type

Payment Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions























































Clauses



































Relevant Industries

Technology

Manufacturing

Healthcare

Professional Services

Retail

E-commerce

Financial Services

Real Estate

Media and Entertainment

Telecommunications

Pharmaceutical

Consumer Goods

Industrial Products

Software and IT Services

Relevant Teams

Legal

Finance

Corporate Development

Mergers & Acquisitions

Tax

Compliance

Treasury

Corporate Strategy

Business Development

Operations

Financial Planning & Analysis

Integration

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Head of Mergers & Acquisitions

Corporate Development Director

Finance Director

Legal Counsel

Investment Banking Director

Transaction Advisory Partner

Due Diligence Manager

Corporate Finance Manager

Tax Director

Integration Manager

Business Development Director

Commercial Director

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

Find the exact document you need

Honorarium Agreement Letter

An Indian law-compliant formal letter establishing terms for honorarium payment to individuals for their professional services or expertise.

Download

Contract To Pay

An Indian law-governed agreement that establishes and formalizes payment obligations between parties, including payment terms, timelines, and enforcement mechanisms.

Download

Agreement For Money Received

An Indian law-compliant agreement acknowledging receipt of money and establishing repayment terms between parties.

Download

Vehicle Payment Agreement

An Indian law-governed agreement establishing terms and conditions for vehicle financing, including payment obligations and security interests.

Download

Private Car Payment Contract

An Indian law-governed agreement establishing terms and payment schedule for private vehicle purchase, including ownership transfer and party obligations.

Download

Partial Payment Agreement Letter

An Indian jurisdiction document establishing terms for partial debt settlement through structured payment plans, governed by Indian contract law.

Download

Contract Of Repayment

An Indian law-governed agreement establishing terms and conditions for debt repayment between creditor and debtor.

Download

Past Due Rent Payment Agreement

An Indian law-compliant agreement between landlord and tenant establishing terms for payment of overdue rent, including payment schedule and default provisions.

Download

Employee Payment Agreement

An Indian law-compliant agreement detailing employee compensation terms, including salary structure, benefits, and payment conditions.

Download

Rent Arrears Agreement Letter

An Indian law-compliant letter agreement documenting rent arrears and establishing a formal repayment plan between landlord and tenant.

Download

Lease Deferral

An Indian law-compliant agreement that allows temporary deferral of lease payments while maintaining the original lease's validity.

Download

Agreement To Pay

An Indian law-governed agreement that formalizes debt obligations and repayment terms between parties, establishing legally binding payment commitments.

Download

Agreement For Receiving Money

An Indian law-governed agreement establishing terms and conditions for receiving monetary payments, ensuring legal compliance and protection for all parties involved.

Download

Money Contract

An Indian law-governed agreement establishing terms and conditions for monetary lending between parties, including loan amount, interest, repayment terms, and enforcement provisions.

Download

Auto Payment Contract

Indian-law compliant contract template for setting up automated recurring payment arrangements, following RBI guidelines and banking regulations.

Download

Contract For Payment Of Services

An Indian law-governed agreement establishing terms for service provision and payment between service provider and client.

Download

Fee Payment Agreement

An Indian law-governed agreement establishing terms and conditions for fee payments between parties, including payment structure, schedule, and compliance requirements.

Download

Collection Payment Agreement Letter

A formal document under Indian law that establishes debt repayment terms and collection procedures between creditor and debtor.

Download

Advance Payment Agreement Letter

A legally binding document under Indian law that establishes terms and conditions for advance payments between parties, ensuring protection and clarity in business transactions.

Download

Accident Payment Agreement

An Indian law-governed agreement that establishes terms for accident compensation payment and settlement between involved parties.

Download

Employee Repayment Agreement

An India-compliant agreement establishing terms for employee repayment of employer-provided training or education costs.

Download

Settlement Agreement Payment

An Indian law-governed agreement that formalizes payment terms and conditions to settle disputes between parties, including releases and enforcement provisions.

Download

Contract For Repayment Of Money

An Indian law-governed agreement establishing terms for money repayment, including principal, interest, and default provisions.

Download

Letter Of Agreement For Payment Of Lot

An Indian jurisdiction document establishing payment terms and conditions for a land parcel between buyer and seller.

Download

Pay Back Agreement

An Indian law-governed agreement establishing terms for repayment of funds between parties, including payment schedules and enforcement provisions.

Download

Agreement To Pay For Services

An Indian law-governed agreement establishing payment terms and obligations for services, including delivery, payment schedules, and default remedies.

Download

Rental Agreement Advance Payment

An Indian law-compliant agreement detailing terms and conditions for rental property advance payments between landlord and tenant.

Download

Personal Loan Repayment Agreement

An Indian law-governed agreement establishing terms and conditions for personal loan repayment between lender and borrower.

Download

Payment Schedule Agreement

An Indian law-governed agreement establishing structured payment terms and schedules between parties, detailing payment obligations and compliance requirements.

Download

Payment For Contract

An Indian law-governed agreement establishing payment terms, conditions, and obligations between parties, including payment security and compliance with Indian financial regulations.

Download

Partial Payment Agreement For Lot

An Indian law-compliant agreement establishing terms for lot purchase through structured partial payments, including payment schedule and property transfer conditions.

Download

Partial Payment Agreement For House And Lot

An Indian law-governed agreement establishing terms for purchasing property through structured partial payments, including payment schedule and conditions for title transfer.

Download

Non Payment Agreement

An Indian law-governed agreement establishing restrictions on specific payments between parties, with enforcement mechanisms and remedies under Indian contract law.

Download

Lot Payment Agreement

An Indian law-governed agreement establishing structured payment terms and conditions for lot purchases, including payment schedules and property transfer specifications.

Download

Land Payment Agreement Letter

A formal document under Indian law that outlines payment terms and conditions for land transactions between buyers and sellers.

Download

Independent Contractor Payment Agreement

An India-compliant agreement establishing payment terms and conditions for independent contractor engagements, including tax and legal requirements.

Download

Final Payment Agreement

An Indian law-governed agreement that documents final payment terms, settlement conditions, and mutual releases between parties upon project or service completion.

Download

Delayed Payment Agreement

An Indian law-governed agreement that structures the delayed payment of an existing debt, including revised payment schedules and interest terms.

Download

Credit Payment Agreement Letter

An Indian-law governed formal letter establishing credit payment terms between lender and borrower, including amount, interest, and payment schedule.

Download

Car Payment Takeover Agreement

An Indian law-governed agreement facilitating the transfer of car payment obligations from an existing debtor to a new debtor, outlining payment terms and responsibilities.

Download
See more related templates

ұԾ’s Security Promise

Genie is the safest place to draft. Here’s how we prioritise your privacy and security.

Your documents are private:

We do not train on your data; ұԾ’s AI improves independently

All data stored on Genie is private to your organisation

Your documents are protected:

Your documents are protected by ultra-secure 256-bit encryption

We are ISO27001 certified, so your data is secure

Organizational security:

You retain IP ownership of your documents and their information

You have full control over your data and who gets to see it