Contingent purchase-price mechanism: a portion of consideration is deferred and paid only if the target hits specified post-closing milestones (typically EBITDA or revenue targets over 1-3 years). Used to bridge valuation gaps when buyer and seller disagree on the target's future performance. Pros: ties payment to results, reduces buyer's upfront risk. Cons: creates disputes over how ``EBITDA'' is calculated post-close (the definitive agreement must define it precisely), the seller loses operational control (the buyer may underinvest to suppress earn-out EBITDA), and accounting for contingent consideration is complex. Most common in middle-market and private deals; rare in large public-company transactions.