Earnout

In French, pronounced, "Air New."

But it's not...French. It's very Silicon Valley.

You invent a dynamite new app that you know will take the world by storm (and make a lot of money in the process). However, you don't really know how to market it and, frankly, your bills are starting to add up. So you decide to sell to one of the half dozen suitors who want to buy it for a million bucks.

You make a deal to sell the app to a Zynga, world's biggest maker of apps. But you and the Corporate Development person don't see eye to eye on price. You want 8; they want 5. You think your growth will be the shape of an F-16 taking off; they think it will be more like a Boeing 767. So you negotiate an earnout.

This provision allows you to get additional payments down the road based on the performance of the app. So you'll get some money now, an additional payment when the app reaches 10,000 downloads, another one at 25,000 downloads, etc. If it's more like the F-16, you get closer to 8; if more like the 767, you get closer to 5...and the deal then is "hedged," so that the buyer doesn't feel ripped off and the seller doesn't feel like a shmuck.