A contingency component of an acquisition agreement in which the acquiring company consents to additional payments in the event certain performance-based goals are achieved. For example, owners put a promising but money-losing technology company up for sale. A buyer with substantial capital agrees to pay a fairly low price and assume the firm's debt. As part of the sale agreement, the buyer agrees to share with the sellers a portion of future earnings in the event the venture is successful. The earnout reduces the risk to the buyer, who benefits from a low acquisition price, at the same time it allows the sellers to participate in future success of the enterprise they were unable to fund.