I am speaking with the seller of a medical related business and she is interested in staying on board and rolling equity into the deal.. She would also like an earn out over 3 years which she says will incentivize her to continue to grow the company. She would also like a bonus structure put in place for her and some of the key staff. The bonus would be a supplment to her salary once certain EBITDA and revenue targets are met and would be 5% of EBITDA (once she hits certain metrics). I am wondering whether the earn out and the bonus she is suggesting is the same thing? Does it sound like she is doubling up the profits by having an earn out and bonuses? Im not sure if I am thinking about it the right way. I would appreciate everyones thoughts. Just for clarity, the bonuses would be paid out annually, where as as the earn out would be paid after three years. Thank you.
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