Can a deal include both an earn-out and a separate escrow holdback, or do I have to choose one?

Yes, a deal can include both, and it is common for them to run side by side because they serve genuinely different purposes rather than competing for the same role. An earn-out ties part of the purchase price to the business's future performance against agreed metrics after closing, essentially bridging a gap between what the buyer and seller each believe the business is worth. An escrow or holdback, by contrast, secures the buyer's ability to actually recover on indemnity claims for breaches of the seller's representations, warranties, or other deal obligations, addressing a completely different kind of risk.

A single purchase agreement can include an earn-out mechanism and a separate escrow fund operating independently of each other, sometimes even both drawing from the same underlying pool of deferred consideration, so long as the agreement clearly sets out how each works, how any claims against the escrow are handled separately from the earn-out calculation, and how any overlap between the two is resolved if it ever arises. There is no requirement to pick only one.