Earn-outs in Polish deals – where do disputes most often arise?
An earn-out can be the softest part of an otherwise hard contract. Parties often agree its size faster than the rules for calculating it. That's exactly where the problems start.
In Polish deals, earn-outs show up most often when selling founder-run companies, in deals with a strategic investor, in technology companies, and wherever the parties disagree about future results. Below are the five areas where disagreement most often arises – and how to head them off in the contract.
Defining the metric
The most common source of conflict is how EBITDA or revenue is calculated for the earn-out. The contract should carry its own transaction-specific definition, not a general reference to “accounting principles used by the company.”
It needs to spell out how group costs and management fees, related-party transactions, integration costs, accounting policy changes, one-off events, and the treatment of new investments, acquisitions, and revenue shifted to other group entities are handled.
Control over the company post-closing
After closing, the buyer usually makes the operating decisions, while the earn-out depends on results those decisions affect. That’s why contracts often include commitments on how the business is run during the earn-out period.
Practical limits can cover moving clients or contracts to other group companies, material pricing policy changes, discontinuing a business line, cutting the sales and marketing budget, workforce restructuring, and group cost allocation.
The seller’s information rights
If the seller has no access to financial data after the deal, the practical ability to challenge the calculation is very limited. The contract should set out the scope of reporting, how often information is shared, the right to inspect source documents, and the deadline for the seller to raise objections.
Settlement and dispute-resolution procedure
A well-structured earn-out has a clear timetable: the buyer prepares the calculation, the seller gets a deadline to raise objections, there’s a process for reaching agreement, and – failing that – an independent expert, usually an audit firm, resolves accounting questions. It pays to fix the selection method, scope of authority, timeline, and cost-sharing rules in advance.
Securing the payment
An earn-out is a future, conditional claim. Its value depends not only on hitting the KPI but also on the buyer’s ability to pay. That’s why sellers may negotiate security: a bank guarantee, a parent-company guarantee, escrow, or a set-off mechanism.
Tax aspects worth keeping in mind
A contingent price structure also carries tax consequences. KPMG in Poland notes that in practice questions arise over when income is recognised on the seller’s side and how price adjustments, including an earn-out, should be treated.
This should always be reviewed with a tax advisor, since the outcome depends on the deal structure, the timing of the share transfer, and how the payment is defined. This article does not constitute tax advice.
A checklist for sellers
Is the KPI defined unambiguously in the contract?
Is it clear which adjustments are allowed and which aren’t?
Are the business-conduct rules for the earn-out period defined?
Does the seller have real information rights?
Is there a dispute-resolution procedure?
Is the payment secured in any way?
Have the tax consequences of the chosen structure been reviewed?
The practical takeaway is simple: an earn-out shouldn’t be the last item negotiated. The later the parties start discussing definitions and procedure, the higher the risk of a post-deal dispute.
When an earn-out stops being a tool and becomes a problem
The hardest situations we see don’t come from bad faith on the buyer’s side. They come from the fact that the company stops being the same company after the deal. It joins a group, gets a new reporting system, some clients are handled by another entity, central costs rise – and a year on, nobody can reliably reconstruct the KPI written into the contract.
So it’s worth asking one question up front with an earn-out: will it still be possible in two years to calculate this metric in a way that can’t be disputed? If the answer is “it depends on how the company gets integrated,” better to switch to a metric that survives integration – or move that value into the cash price instead.
This material is for informational purposes only and does not constitute legal or tax advice.
Sources used: Kochański & Partners (Earn-out – price-setting mechanism), KPMG Poland (Tax aspects of price adjustments in M&A), SRS Acquiom (2026 M&A Deal Terms Study), Grant Thornton (Use upfront diligence to head off M&A disputes).
