Additional Consideration - Sale of Business

When a buyer and seller of a business cannot agree on a cash purchase price, there are other possible means of filling the gap. Some alternatives are:

  1. The buyer offers the seller of the business an option to purchase stock in the newly formed corporation at an attractive price that can be exercised over a period of time. The stock can be common or preferred stock.
  2. The buyer can give the seller of the business preferred, non-voting stock in the new corporation as part of the consideration paid.
  3. An earnout can be structured in order to provide the seller with additional compensation if the new company"generates revenue above defined levels.
  4. The buyer can provide the seller with a substantial discount on its products and/or services.
  5. The buyer of the business can pay the seller a guaranteed consulting fee over a defined period of time for services to be provided.