How do earnouts, seller notes and escrow affect my plan after selling my business?
Part of a purchase price often arrives after closing: an earnout that depends on future results, a note the buyer pays over time, or an amount held in escrow until certain conditions pass. Each can arrive later than expected, in a different amount, or not at all.
For planning, money received at closing and money that is promised are treated differently. Essential spending is usually built on what has been received, while later payments are counted only as they arrive. What the agreement actually requires is a question for the transaction attorney, and how each payment is taxed is a question for the CPA.
Reviewed by Bay Area Wealth Advisors. Last reviewed 2026-10-06. Educational information only — not individualized financial, tax or legal advice.