What is deferred consideration?

Deferred consideration is the amount of consideration which is not paid over at the completion date of a transaction. It is by definition, deferred until a future date. Deferred payments are guaranteed to be paid out and are not therefore usually contingent upon any metrics being achieved (compared to an earnout provision which is fully contingent upon a set of KPIs or metrics being achieved in order to trigger the earnout payment provisions). Deferred consideration allows the purchaser to defer some of the acquisition cost. Sellers therefore have a vested interest in the business in the future in terms of their deferred consideration being paid out to them.

Deferred payments with reference to SME businesses

Deferred consideration in the context a business purchase can be any amount which is agreed between the buyer and seller. It forms part of the forma