Has anyone here earned into ownership?

September 28, 2025

by a searcher from Ivey Business School at Western University in Toronto, ON, Canada

Curious if anyone in the community has ever structured an earn-in to ownership rather than buying in outright. What did that look like in practice? Was it tied to time in the business, performance (e.g. EBITDA milestones), or both? How was equity allocated and documented? Any lessons learned or pitfalls to avoid? Would love to hear examples or experiences from people who have gone through this.

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Reply by a professional
from American University in Irvine, CA, USA

We have structured various earn-in arrangements for clients. The first question is whether this is an earn-in for one or more individuals for services being rendered to benefit the enterprise, or whether this is a strategic corporate earn-in between stand-alone entities working collaboratively toward a common objective. If it is for an individual, the formula will typically be incorporated into the Executive Employment Agreement, and be allocated in accordance with the terms of an Incentive Plan previously adopted by the company issuing the equity, or if no Plan is in place, then by Board and Shareholder resolutions adopting the arrangements. But make sure you have brought your CPA into the discussion, to ensure that you are not creating unintended employment tax consequences for either the recipient or the employer/issuer. On the other hand, if this is a corporate earn-in, where one entity will receive equity or other profit sharing between stand-alone corporate entities, then this is typically structured as a joint venture, either by contract or through establishment of an entity to be an SPV joint venture company (often through an LLC). In those cases, the earn-in provisions and milestones will be documented in the JV Agreement or LLC Operating Agreement as a part of the structure. Happy to answer any questions, or discuss further, if you DM me.

Reply by an admin
from Massachusetts Institute of Technology in Portland, OR, USA

^redacted might be able to comment on Earn-Ins here.

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