DealLawyers.com Blog

Seyfarth Shaw recently published the 12th edition of its “Middle Market M&A SurveyBook,” which analyzes key contractual terms for over 160 middle market (i.e., purchase price of less than $1 billion) private target acquisition agreements signed in 2025 and the first half of 2026. Check out the full survey for info on trends in private target acquisition agreements. For example, they found that earnouts were more common in this latest survey set but the value tied to the earnouts had moderated a bit.

Of the deals surveyed in 2025/2026, 19% included earnouts, as compared to 13% in 2024/2025. In addition, of the deals surveyed in 2025/2026 with earnouts:

– 15% of such deals provided for earnout amounts of 50% or more of the purchase price (as compared to 45% in 2024/2025).
– 67% of such deals provided for earnout amounts between 10% and 50% of the purchase price (as compared to 30% in 2024/2025).
– 18% of such deals provided for earnout amounts less than 10% of the purchase price (as compared to 25% in 2024/2025).

The shift toward earnouts falling between 10% and 50% of the purchase price, rather than 50% or more, suggests that while earnouts became more common in 2025/2026, they are also being structured with more moderate stakes tied to future performance. This is generally a more balanced position for sellers, as it reduces the share of total consideration contingent on post-closing performance while still preserving (and increasing the use of) the earnout as a deal mechanism.

– Meredith Ervine