How One Growing Agency's Board Pack Changed After an Earnout

Read the earnout definitions in the purchase agreement closely: how revenue is defined (gross billings versus net revenue matters enormously for an agency), what counts toward the margin target, and what happens if a client relationship the holding company brought in doesn't materialize as expected. Whatever those definitions are, the board needs to track performance against them every quarter with enough documentation that neither side can later dispute what was reported and when.

A holding company acquiring an agency is often building a portfolio and wants visibility into how dependent the earnout's success is on a small number of client relationships. Add a client concentration table to every board pack: top five clients by revenue, contract renewal dates, and any relationship risk (a champion who left, a review coming up). This is a metric agencies rarely tracked formally before an acquisition and one that becomes essential immediately after, and it's worth keeping on the standing agenda even once the earnout period is fully behind you, since the same underlying concentration risk never really goes away on its own.

If the holding company already runs its other portfolio agencies through Diligent, matching that choice usually simplifies your own reporting and may come with support the holding company's team already knows how to provide. Absent an existing standard, weigh BoardPro's simpler setup against Diligent's more rigorous resolution and committee tracking, which matters more if the holding company plans to add further agency acquisitions to the same portfolio.

Revenue and margin against earnout targets, client concentration, and pipeline health should be a template built once and reused, not rebuilt from scratch each meeting. Agencies that treat each board pack as a fresh design exercise waste time on formatting that should go into analysis, and inconsistent formatting quarter to quarter makes it harder for the holding company's board member to spot trends.

Document the board's discussion of a missed target formally, including any agreed corrective plan, rather than letting it pass with an informal conversation. If a dispute over the earnout payout ever arises, and they aren't rare in agency acquisitions, a clean contemporaneous record of what was discussed and agreed each quarter is far stronger evidence than reconstructed memory from either side.

Once the earnout concludes, revisit the governance structure itself. Some holding companies loosen reporting requirements once the earnout no longer creates a shared financial stake in short-term performance; others keep the same cadence because it proved useful. Either way, this is a natural point to reassess whether the board tool chosen under earnout pressure still fits the agency's ongoing needs, rather than defaulting to whatever was set up in the rush after close.

Agency founders who've been through an earnout period consistently point to the same regret: not documenting informal conversations with the holding company's board member about how a metric would be calculated in an edge case, a large one-time project, a client that paused mid-quarter, until a formal dispute made the earlier informal understanding suddenly important. Write down the substance of any metric-definition conversation in the board minutes, even an informal one, the same week it happens, rather than trusting memory to hold up months or years later when the earnout period closes and the final numbers get reconciled.

That single habit, treating an offhand clarifying conversation as worth a documented line in the minutes, costs almost nothing in the moment and is consistently the difference between a smooth earnout reconciliation and a contentious one. Founders who built that habit early describe the final reconciliation meeting as almost anticlimactic, since both sides already agreed on the numbers months before the check was due.

Write these down as they happen:

• Informal conversations with the holding company's board member about how a metric would be calculated in an edge case.
• How a large one-time project is treated in the revenue and margin targets.
• How a client that pauses mid-quarter counts toward the earnout metrics.
• Any agreed calculation clarification, recorded in board minutes so it survives a later dispute.