This article considers the various ways in which payment
of the purchase price in an acquisition can be
structured. Variations can occur in the types of
consideration payable at the closing, and many
acquisitions provide for a post-closing adjustment or
true-up. Further, the acquisition may include an earnout
payable over a considerable period of time after the
closing. Each of these purchase price provisions
significantly impacts the leverages of the parties, the
tax and accounting treatment of the transaction, the
securities laws ramifications of the acquisition and the
relationship of the buyer and seller after the closing.
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