Consideration: The Mutual Compensation Between the Buyer & Seller
One of the biggest aspects of buying a business is the exchange of funds between the buyer and the seller. The most common form of payment for a company is cash, but there are other forms known as “consideration.” Consideration can be anything that a seller is willing to accept for compensation for the sale of their business. Consideration can come in the form of land, another company, cash, or anything of value.
Consideration is only limited by what the buyer and seller mutually agree on. For example, the company at-hand might be a small candle store. If the buyer and seller have a good relationship and cash is not a sensible option for the two, they might agree to exchange land and two cars for consideration. Buying a business through consideration is a great way to finance a deal when neither side possesses enough capital.