Contingent Payment Structures

Contingent Payment Structures are the most common form of Alternative Exits. Unlike a traditional note or loan, the time and/or payment amounts made by these structures are contingent on some other factor like company revenues.

Royalties are a special case of contingent payments as the payment of royalty is contingent on events that trigger a royalty payment, typically the use of intellectually properly. While Royalties are contingent payments the converse is not true and not all contingent payments are royalties. This distinction is important in countries like the United States that have different tax treatment for royalties than other forms of contingent payment.

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