Earn-In
Private Equity glossary · Private Equity Fundamentals
Definition
Compensation structure giving management additional equity if specific post-closing performance targets are achieved.
Earn-In in plain English
When investors buy a company, they usually want the managers running it to stay hungry and stick around. An earn-in is a deal that says: if you (the management team) hit certain targets after the sale — like growing profits to a set level — you get handed extra ownership (equity) in the company as a reward. Think of it like a video game where clearing the next level unlocks a bigger share of the treasure. It aligns the managers' payday with actually making the business better, not just cashing out and coasting.
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