The report, which analyzed filings from public companies, reveals that earn-outs and other contingent payments now account for a larger slice of enterprise value. In 2025, these arrangements appeared in 23.7% of transactions, up from 22.3% the previous year, with the contingent portion representing 20.3% of total enterprise value on average. This reliance on future performance metrics complicates fair value measurements, demanding greater scrutiny of the underlying assumptions.
M&A Deals Shift Toward Performance-Based Payouts as Volume Dips
A 9% decline in non-bargain-purchase transactions during 2025 masks a deeper transformation in corporate dealmaking, according to Stout’s 2026 Purchase Price Allocation Study. While overall deal volume fell to 725 transactions, buyers increasingly relied on contingent consideration to bridge valuation gaps and manage future risk.
Sector performance diverged sharply throughout the year. Information Technology defied the broader downward trend, growing from 177 to 191 transactions with median enterprise values rising to $79 million. Conversely, the Consumer Discretionary sector saw a contraction in deal count from 82 to 63, though the median size of those transactions surged from $27 million to $92 million. Managing Director Justin Pogge noted that as more deal value becomes tethered to future results, the complexity of purchase accounting and valuation increases significantly. Stout’s analysis, based on a review of over 22,000 SEC filings, serves as a benchmark for professionals navigating these volatile allocation structures.
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