Seller Ebitda Clawback

searcher profile

November 07, 2024

by a searcher from Harvard University in Toronto, ON, Canada

I am working on a clawback for a NJ deal, premature stage. This is to protect the sudden upsurge commercial businesses see post-covid.
Anyone here experienced similar situation? Help with some experience. Of course it is not a happy discussion with seller, that I am slamming a drop of ebitda out of his seller note. how did you tackle this?

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commentor profile
Reply by a lender
in Falmouth, MA, USA
Using the term 'clawback' can sound harsh to sellers. Instead, consider framing it as an earnout or a forgivable seller note. To make this approach compelling, you need a solid argument for why you believe EBITDA will decline. I’m curious about the industry of the business. At this point, you should have a clear picture of how performance has rebounded since COVID.
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Reply by a professional
from The Johns Hopkins University in Basking Ridge, NJ 07920, USA
To care to not be harsh, nomenclature is less important. The key is bringing up the concept at the right time to have support for position - whether it be a forgivable note, holdback or lower price with an earnout. Happy to discuss but best of luck!
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