Tariff volatility (Section 122 expiration, Section 232 expansion, Section 301 changes) creates earnout calculation issues. Common protection: pass-through provisions where actual tariff costs flow through to earnout calculations, baseline definition adjustments, scenario-specific earnout structures.
This guide covers Earnouts and Tariff Exposure. M&A and corporate transaction tariff work supports buyers, sellers, and ongoing portfolio operations.
Practical implementation depends on company size, sector, and operational structure.
EBITDA volatility from tariff changes
Section 122 expiration July 24 alone could shift target EBITDA by 5-15% depending on import mix.
Pass-through provisions
Earnout calculations exclude tariff cost variance from baseline. Protects both buyer and seller from regulatory volatility.
Baseline definition adjustments
Define baseline period explicitly. Specify treatment of one-time refund recoveries vs. ongoing rate changes.
Scenario-specific structures
Some deals include conditional earnout adjustments tied to tariff outcomes (e.g., Congressional extension vs. expiration).
Frequently asked questions
When does this apply?
Most relevant for SMB importers in the named sector or facing the named situation.
What documentation matters?
Standard CBP forms, supplier certificates, BOM analysis, and topic-specific records.
What is the timeline?
Initial assessment 2-4 weeks; full implementation 8-16 weeks depending on scope.
What does this cost?
Project work $5,000-$25,000 depending on complexity. Ongoing retainer for active operations.
How do I begin?
Book a 15-minute scoping call. We confirm fit before any engagement.
Get started
Engage on PE / M&A tariff work. DD Snapshot $8-15k; portfolio review priced separately.