We continue our interview series with Justin T. Stolte, partner at Gibson, Dunn & Crutcher LLP. Part three picks up by looking at how deals are getting done.
Stolte looks at how deals are getting done through novel deal structures or mechanisms such as valuation divides and contingent payments.
Stolte says contingent payments can be used across the industry. “On the upstream side we are typically seeing contingent payments tied to commodity prices. But on the midstream side or the downstream side, those contingent payments look more like earn-outs. They are really tied to the performance of the underlying business. If there is some set criteria where the business post closing is performing better than the parties anticipated there needs to be a means in a lot of deal makers eyes for the buyer to compensate seller.”
VIDEO SERIES: Challenges Ahead For M&A Transactions Market