He establishes a scenario where the seller could be burned, and offers specific examples of types of post-closing covenants to include in the share purchase agreements, and suggests drafting the earnout as a "reverse earnout" to avoid potential problems. The full article is available on Divestopedia.
Peter Ferrari on Preventing Earnout Problems
Guild Yule corporate lawyer Peter Ferrari recently published an article on Divestopedia, a website for "for entrepreneurs who want to sell their business for the best price and terms." In Earnouts or Burnouts - Don't Get Burned on an Earnout, Ferrari explains that "earnouts are difficult legal clauses to manage and can often lead to misunderstanding and difficulty realizing them."