Logitech's SEC filings indicate that the Slim Devices acquisition included an "earn-out" provision based on calender 2009 revenue. It's public information, and has likely been around for a few years. Forgive me if previously discussed here - if so, I missed it.
A few interesting points - 1. Contingent payment (known as "earn-out") could be due in 2010 based on calender 2009 revenue. Max of $89.5 million, which is very large compared to down payment of $20.6. 2. Earn-outs are used to when seller thinks the business is worth more (due to future potential) than the buyer. So buyer says, "if you're right, we're happy to pay more", and the numbers are negotiated. 3. Buyers use earn-outs as a means to keep founders/management in place for a transitionary period. 4. Nothing due if revenue is less than $40 million. Since earn-out targets are (by definition) a stretch, it gives an indication that the SB business was likely much less than this at acquisition time. My commentary - not unusual to see rabbits get pulled out of hats to achieve earn-out formulas. It makes one wonder if any product/promotion/services/bundling will be announced to help boost revenue? Or, was Boom the last arrow in the quiver and what remains is just sales and marketing to get the best possible results? Note that it is not unusual to see founders leave after earn-out periods pass. Also not unusual for founders to share a portion of earnout with key employees, and for them to similarly leave if a big payout results. -- Goodsounds ------------------------------------------------------------------------ Goodsounds's Profile: http://forums.slimdevices.com/member.php?userid=14201 View this thread: http://forums.slimdevices.com/showthread.php?t=56164 _______________________________________________ discuss mailing list [email protected] http://lists.slimdevices.com/lists/listinfo/discuss
