On 22 September Allwyn, the Czech-owned lottery and betting group, agreed to buy 62.3% of PrizePicks, a US daily fantasy operator. The initial price is USD 1.6 billion in cash, valuing PrizePicks at USD 2.5 billion. If PrizePicks hits its performance targets over the next three years, the valuation rises to as much as USD 4.15 billion.
So roughly 40% of the potential value sits in an earn-out.
We are highlighting this because it is a clean example of how a serious buyer bridges a valuation gap. The seller believed in a growth story. The buyer was willing to pay for it, but only once it was delivered. The earn-out let both sides sign.
Earn-outs are becoming standard in CEE deals as well, especially where the target is growing fast, where regulation may change, or where the buyer is financing with debt and needs to limit the day-one cheque. A few things we tell sellers before they accept one.
Define the metric precisely. Revenue is easier to measure than EBITDA, and EBITDA is easier than “adjusted” EBITDA. The more adjustments, the more arguments.
Agree who runs the business during the earn-out period and what the buyer can and cannot change. A buyer who cuts marketing in year one can kill an earn-out based on year-three revenue.
Cap the downside. A seller should know the minimum they walk away with even if the earn-out pays nothing.
Keep the period short. Three years is the outside edge; two is better.
Also this month, EY’s CEE M&A Barometer for the second quarter showed 245 deals worth USD 22.6 billion, value up 7% year on year but volume down 36%. Fewer, bigger deals. In that market, a well-structured earn-out is often what gets a mid-market deal across the line.
(Sources: Allwyn press release, 22 September 2025; SBC News; EY CEE M&A Barometer Q2 2025)