The Earnout: Why Founders Hate "Golden Handcuffs"
An Earnout bridges the gap on price. But you lose control of the company. If the buyer screws up the product, you miss your targets.
What is Golden Handcuffs?
Golden Handcuffs is Financial incentives that force you to stay at a job you dislike.
The 3 Core Benefits
Higher Valuation
If you want $10M and they offer $8M, an Earnout can get you to $10M if you deliver growth. It bridges the gap.
Skin in the Game
Buyers love earnouts because it ensures you don't just dump the keys and run. You care about the transition.
Resource Unlock
Ideally, the buyer gives you more marketing budget to hit those targets. (Make sure this is in the contract).
Protecting Your Earnout
Revenue > Profit
Tie targets to Revenue (Top Line). Buyers can manipulate Profit (Bottom Line) by adding "Corporate Overhead" costs.
Control Clauses
Demand a clause that says "Buyer cannot reduce marketing budget" or "Buyer cannot fire my sales team." You need tools to win.
Acceleration
If the buyer sells the company AGAIN, or fires you without cause, the Earnout should pay out immediately ("Accelerate").
Keep it Short
1 year is standard. 3 years is a prison sentence. In tech, 3 years is a lifetime.
Founder Stories
Read horror stories on Mesh about founders who got $0 from their earnout. Learn from their mistakes.
Vague Promises vs. Ironclad Contract
| Feature | Vague Promises | Ironclad Contract |
|---|---|---|
| Target | Profit (EBITDA) | Revenue / Gross Profit |
| Budget | Buyer's Discretion | Guaranteed Minimum |
| Payout | Risk | Bonus |
Frequently Asked Questions
What if I hate the new boss?
You suffer. Or you quit and lose the money. This is why "Cultural Fit" with the buyer matters.
Are earnouts common?
In Service businesses, yes. In SaaS, less common, but still used for "Acqui-hires" or high-growth gaps.
Can I negotiate $0 earnout?
Yes. Take a lower total price for 100% cash at close. "I want a clean break." Most founders prefer this.
What makes a launch channel high intent?
High-intent channels have users actively searching for solutions, not just browsing a feed.
How many channels should I launch on?
Start with 3-5 strong channels, measure conversions, then expand to 10-12 over time.
How do I avoid launch fatigue?
Stagger your launches and reuse assets so each channel gets a focused push.
What should I measure after launch?
Track qualified signups, backlinks, and demo requests, not just raw traffic.
How does Mesh of Growth fit with other platforms?
Use Mesh for compounding reviews and backlinks while other platforms provide short-term spikes.
Ready to get instant traffic from trusted founders?
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