The Role and Structure of Earnouts among Swedish Serial Acquirers : A Mixed-method Study

Sammanfattning

This thesis examines earnouts and their application in transactions conducted by Swedish serial acquirers, focusing on structure, prevalence, and the motivations behind their use. By addressing the gap in literature regarding Swedish serial acquirers, the study contributes to practical knowledge and academic research on earnouts in the M&A context.A mixed-method approach was adopted, combining a descriptive quantitative analysis of 223 M&A transactions completed between 2021 and 2024 by eight publicly listed Swedish serial acquirers, with qualitative insights from semi-structured interviews with M&A professionals at the same firms. A sequential explanatory design begins with quantifying earnout frequency, ratio, and tied performance metrics, followed by thematic analysis of interview data to understand the reasoning behind their use.The findings reveal a high prevalence of earnouts, being present in 72 percent of all the transactions studied. Earnout ratio on average made up 27 percent of the total purchase price, and earnouts were most commonly tied to earnings-based metrics (93 percent), with EBITA being used the most (40 percent). Core motivations behind their use were mainly bridging valuation gaps from information asymmetry, and secondly, retaining key management post-acquisition.The results showcase how earnouts are a valuable tool for serial acquirers active in Sweden, mitigating uncertainties and transaction risks.