Good morning. Earnouts are on the rise in mergers and acquisitions as companies look to close the gap between what buyers want to pay for a deal and what sellers think they are worth.

Corporate M&A last year plunged to the lowest level in a decade as companies found it difficult to agree on a price, reports Kristin Broughton. For buyers, interest-rate hikes over the past two years aimed at curbing inflation have increased financing costs and lowered the projected value of potential targets in an uncertain economy. For sellers, meanwhile, rising stock-market valuations have given them confidence to demand higher offers.

With an earnout, companies make a portion of the deal value contingent on a seller’s future performance. Buyers pay a certain amount at closing, and agree to pay an additional chunk if the seller achieves one or more financial or operational metrics—such as revenue, profit or regulatory approval—down the road.

🗓️ Earnings

• American Express
• Colgate-Palmolive
• Norfolk Southern

📈 Economic indicators

The BEA releases the personal-consumption expenditures price index for December.

The National Association of Realtors releases its Pending Home Sales index for December.

The recession never showed up in 2023. Consumers made sure of it.

The U.S. economy grew 3.1% from a year earlier in the fourth quarter, the Commerce Department said Thursday. A resilient labor market supported strong consumer spending and brushed aside a feared downturn. A year ago economists saw a recession as very likely and projected anemic 0.2% growth for the year. Instead, last year’s gain was a sharp pickup from a comparable 0.7% advance in 2022.

• Microsoft on Thursday became the second company ever to end the trading day valued at more than $3 trillion, a milestone reflecting investor optimism that one of the oldest tech companies is leading an artificial-intelligence revolution.
• Microsoft is laying off about 8% of its videogaming staff, cuts that largely reflect redundancies from its October acquisition of Activision Blizzard.
• The Jamie Dimon executive shuffle is back on at JPMorgan Chase. Several leading lieutenants were given new jobs on Thursday, a set of changes sure to spark whispers about the race to succeed the famous chief executive whenever he decides to step aside.
• The Federal Trade Commission said it would investigate the growing arms race among the biggest technology companies to produce and commercialize artificial intelligence.
• Wall Street has been hoping for IPOs to make a comeback in 2024. One of the first major debuts planned is off to a rocky start.
• A woman who received a payout from WWE boss Vince McMahon has accused McMahon, the company and a former executive of sex trafficking in a new lawsuit that raises questions about the breadth of an internal company probe conducted by a law firm last year.
• Many voters are prepared to give Donald Trump, the presumptive Republican nominee for president, a second term for one simple reason: They think he managed the economy better than President Biden has. 

📰 More headlines

• GM’s Cruise Says U.S. Is Investigating Driverless Car’s Collision With Pedestrian
• Exclusive: A British Businessman Worked in China for Decades. Then, He Vanished.
• Louis Vuitton Owner’s Sales Beat Expectations
• Intel Gives Muted Outlook Even as PC Recovery Lifts Sales
• Humana Reports Steep Losses, Signals More Trouble for Next Year
• Salesforce Laying Off 700 Workers in Latest Tech Industry Downsizing
• When Layoffs Happen, Remote Workers Are Hardest Hit
• One Stock in the ‘Magnificent Seven’ Isn’t So Magnificent
• Top Job at Levi Strauss Offers Retail Veteran a Second Chance

Credit Acceptance, the Southfield, Mich.-based auto finance company, named Jay Martin as its next finance chief, effective Jan. 23. The company said Martin serves as senior vice president for finance and accounting. He joined the company in 2003. Chief Executive Kenneth Booth previously also served as principal financial officer. The company said that Martin would continue to lead the finance department with Chief Treasury Officer Doug Busk.

—Ben Glickman and Colin Kellaher contributed to this newsletter.

• More companies are reporting security breaches: Hewlett Packard Enterprise, Microsoft and EquiLend, to name a few.
• Some private-equity firms are sticking with natural gas despite climate-related pushback.
• Broadcom’s new billing models for VMware products are making CIOs take notice. 
• A pricing metric for Conagra dipped into negative territory, a sign that consumers are scaling back.
• WeWork is wrestling with lease amendments despite trying to negotiate while in bankruptcy. 

Every weekend we select a handful of articles we think are worth a bit of your time, either because they peel back the layers on a compelling business story or somehow make us look at business in a different light.

• Unhappy workers are costing U.S. firms $1.9 trillion, reports Bloomberg, citing the latest Gallup research.
• The Financial Times this week focuses on how unions are fighting a boardroom battle at Starbucks.
• Here’s what Donald Trump can learn from the Big Mac index, the Economist’s tongue-in-cheek way to value currencies.

The Wall Street Journal's CFO Journal offers corporate leaders and professionals CFO analysis, advice and commentary to make informed decisions. We cover topics ranging from corporate tax accounting, regulation, capital markets, management and strategy.

Follow us on X @WSJCFO. The WSJ CFO Journal Team is reporters Kristin Broughton, Mark Maurer and Jennifer Williams-Alvarez, and Bureau Chief Walden Siew.

You can reach us by replying to any newsletter, or email Walden at walden.siew@wsj.com.