Glossary
Earn-out
Earn-out: Earn-out is the moment when cumulative earned royalties exceed the original advance amount. After earn-out, additional royalties are payable to the licensor as new dollars (not amortization). The earn-out point is a key contract milestone — many contracts price advances based on expected time-to-earn-out.
// In practice
A $50,000 advance and earned royalties cumulating to $50,000 by month 18. Month 19 royalties of $4,000 are payable in full to the licensor — the advance is fully recouped.
// Related terms
Related glossary terms
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