TLDR:
- Genius Sports acquired Spirable with earn-out incentives in place
- Dispute arose between Genius and Spirable executives over earn-out payments
In 2021, Genius Sports acquired Spirable, a social media marketing company, with plans to expand its tech offerings. The acquisition included earn-out incentives totaling $17.5 million. However, less than three years later, a dispute has emerged between Genius and Spirable executives over these earn-out payments, sparking a lawsuit. Spirable executives allege that Genius has intentionally hindered their ability to meet the earn-out targets by slashing resources and firing key personnel. In response, Genius claims that the acquisition was not successful and that Spirable executives were slow to adapt to the technology employed by Genius. The case is ongoing, with arbitration failing earlier this year and witness statements and a trial expected to follow.
The use of earn-out provisions in tech acquisitions has been on the rise in the venture capital world, leading to an increase in disputes between buyers and sellers. This case exemplifies the challenges that can arise when earn-out incentives are not met as anticipated, highlighting the importance of clear and specific language in agreements to avoid such disputes. As the legal proceedings unfold, the outcome of this case will shed light on the evolving landscape of post-deal disputes in the tech industry.
