Two issues ago we showed you ABA data saying earnouts were fading across the market — down to roughly 18% of deals. That's true. It's also the average, and averages are where sellers get misled.
SRS Acquiom's 2026 study of 4,400+ closed private deals looked specifically at transactions under $50M — deals your size — and found the opposite pattern: earnouts appear in 29% of lower-middle-market deals, rising to 35% under $25M. And when one shows up, it isn't a rounding error: the median earnout potential is about 57% of the payment at closing — versus 34% across all deal sizes. Cut the deal size in half and the contingent slice roughly doubles.
The same size-effect shows up after closing. The median period during which a buyer can claw money back runs 15 months in the lower middle market versus 12 across all sizes — and unusually long 24-month claim windows have tripled, now touching 9% of LMM deals. Working-capital pegs are standard in virtually every transaction at this size.
Put plainly: the smaller the company, the more of the price gets moved out of the wire transfer and into paper — earnout targets, escrow, survival periods, the peg. That is where a risk-off buyer prices what they can't verify.
Which is the connection to last week's four checks. Every check you can pass — provable owner independence, concentration under control, documented recurring revenue, books that survive diligence — moves dollars from the contingent pile back into cash at close. Structure isn't a separate negotiation from preparation. It's the invoice for whatever preparation didn't cover.
Before any buyer conversation, know your own structure exposure: if a buyer proposed the LMM medians tomorrow — an earnout worth half your closing payment, a 15-month claim window, a working-capital peg — which of the four checks would you point to, with documents, to negotiate each one down? Anything you can't evidence today is a contingent dollar tomorrow.
The counter to structure is proof — and proof starts with knowing your real number. Bring us your financials and we'll give you a confidential benchmark valuation: where you'd land in today's range, and which checks move the most dollars from earnout back to cash at close.
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