Tying earnouts to revenue alone misses engineering quality. Add these 5 metrics.
Standard earnout: revenue targets only. Better earnout: revenue + engineering health metrics that predict sustainable growth.
Add: PDI score (must stay below 2.0), Innovation ratio (must stay above 40%), Key person retention (80%+ for 18 months), Deployment frequency (must not regress), Customer incident rate (must not increase).
These ensure the acquired team doesn't sacrifice long-term health for short-term revenue targets.
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9 minPublished Work
This article expands on ideas from my published work in CIO.com, Built In, Mind the Product, and HackerNoon. View published articles →
The Product Economist — Quantifying engineering economics for technology leaders, PE firms, and boards.