If a company is negotiating an earnout as part of its acquisition price, you would recommend all of the following except:

a. The acquired company's performance should be easy to separate from the performance of the acquiring company.

b. Be sure to factor out the effect of the acquiring company on the performance of the acquired company.

c. Be sure that the terms of the earnout are unambiguous.

d. It is preferable to use an overall measure of performance such as net income, rather than revenues or gross margin.