Vertiv ( VRT +4.72% ) said Wednesday that it agreed to acquire UtilityInnovation Group (UIG), a designer of on-site power systems for data centers, in a deal worth up to $2.6 billion.

But only about $1.45 billion of that is payable in cash at closing. The remaining $1.15 billion is contingent on the acquired business hitting earnings targets.

That split is the most telling part of the announcement. Vertiv is spending big on the idea that power availability is becoming the thing that most limits how fast artificial intelligence (AI) data centers get built. But it structured the deal so the seller has to prove nearly half the price before collecting it.

A bet on faster power

UIG, founded in 2020, designs and delivers microgrids (self-contained power systems that can combine on-site generation, energy storage, and utility power) for data center operators in the United States and Europe. Its products include a controls platform and switchgear that coordinate multiple power sources in real time.

Vertiv already sells much of the power and cooling equipment inside a data center. Grid constraints increasingly limit how fast AI infrastructure can be deployed, the company said. UIG extends that portfolio upstream to the point where a facility connects to the grid.

Not only does that put Vertiv in the conversation earlier, when a site's power design is being decided, but it also keeps customers from being tied to any single power generation technology or supplier.

"For AI data center operators, competitive advantage increasingly depends on how quickly they can move from site selection to first token," Vertiv CEO Gio Albertazzi said in the announcement.

In other words, the race is to get new capacity powered on and producing.

The deal is expected to close in the fourth quarter of 2026, subject to regulatory approval. Vertiv also expects the acquisition to boost adjusted earnings per share in its first year.

The other $1.15 billion must be earned

The $1.45 billion base price represents about 13 times UIG's expected 2027 earnings before interest, taxes, depreciation, and amortization (EBITDA), according to Vertiv. The additional payments are tied to UIG hitting EBITDA targets over 12- and 24-month measurement periods. Vertiv also said the EBITDA multiple it ends up paying should be "significantly lower" if the full earnout is paid.

Work backward, and Vertiv is effectively saying it expects UIG to produce about $110 million of EBITDA in 2027. And for the full $2.6 billion price to work out to less than 13 times EBITDA, UIG's earnings would need to clear about $200 million -- nearly double that expectation.

In short, Vertiv pays full price only for growth that shows up. Even at the base price, the valuation isn't cheap for a business founded in 2020. But I'd rather see part of the risk of those growth hopes sit with the sellers than all of it with Vertiv shareholders -- and this structure puts it there.

Can Vertiv afford it?

Easily. Vertiv said it expects to fund the acquisition from existing resources -- and it can. The company ended the second quarter of 2026 with $5.6 billion of liquidity and a net cash position, up from $5.0 billion three months earlier. Second-quarter adjusted free cash flow was $925 million, up 234% year over year, and management guided for adjusted free cash flow of $2.4 billion to $2.6 billion this year. The $1.45 billion closing payment, then, amounts to about seven months of cash generation at the midpoint of guidance.

And Vertiv isn't buying revenue growth to mask a slowdown at home. Organic sales rose 23% year over year in the first quarter of 2026, and the second quarter's 18% was a step down that management attributed to timing shifts.

Guidance calls for 34% to 36% organic growth in the third quarter, with about 31% expected for the full year. In other words, management expects growth to reaccelerate, not cool.

NYSE : VRT

Shares of the growth stock trade around $269 as of this writing, about 29% below their 52-week high.

Ultimately, I like the way this deal is built. Vertiv is paying up front for the business UIG is expected to have next year, and the other $1.15 billion depends on what UIG delivers.

Sure, the deal still needs regulatory approval to close. But the money is aimed at arguably the biggest constraint in AI infrastructure today, and it's coming from a company generating more cash than it needs. That seems like a sensible use of it to me.