Deferred Consideration

Income received by a company for goods or services that have not yet been delivered or performed, recorded as a liability on the balance sheet. In SaaS and subscription businesses, deferred revenue is a key indicator of future recognised revenue and contract backlog strength.

The tax effect arising from temporary differences between the fair values assigned to assets and liabilities in a purchase price allocation and their corresponding tax bases. Under IAS 12 and ASC 740, deferred tax liabilities are recognised on the step-up in fair value of acquired intangible assets (which typically have zero tax basis), while deferred tax assets may arise on assumed liabilities.

The process of allocating the total price paid in a business combination to identifiable tangible assets, intangible assets, and liabilities, with any residual assigned to goodwill. PPA is required under IFRS 3 and ASC 805 and is the primary mechanism through which acquired intangible assets are recognised on the balance sheet.

A business combination in which the fair value of the identifiable net assets acquired exceeds the consideration transferred, resulting in a gain rather than goodwill. Under IFRS 3 and ASC 805, the acquirer must reassess whether all assets and liabilities have been correctly identified and measured before recognising a bargain purchase gain in profit or loss.

A potential obligation arising from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity's control, or a present obligation where payment is not probable or the amount cannot be reliably measured. Under IFRS 3, contingent liabilities assumed in a business combination are recognised at fair value at the acquisition date even if it is not probable that an outflow of resources will be required, provided fair value can be reliably measured.

A pricing mechanism in M&A transactions where the purchase price is fixed based on a set of accounts prepared at a specified date prior to completion, with value leakage protections to ensure no value is extracted from the target between the locked box date and closing. Locked box mechanisms provide price certainty and avoid the disputes often associated with completion accounts adjustments.

The present value of future tax savings arising from the amortisation of an intangible asset for tax purposes. The tax amortisation benefit is often added to the value before the benefit, in fair-value measurements such as purchase price allocations; it is an assumption about a hypothetical buyer, not tax relief the actual buyer receives.

Warranties and indemnities are the contractual protections a buyer receives from a seller in a business sale. Warranties are statements of fact about the business — that the accounts are accurate, that it owns its assets, that there are no undisclosed disputes — and if a warranty proves untrue the buyer may claim damages for the resulting loss.

Patent Valuation: Methods, a Worked Example and What a Patent Is Worth

Patent valuation in practice: what drives how much a patent is worth, the four methods valuers use under IVS 210, and a relief-from-royalty calculation that reconciles line by line over a UK patent's remaining legal life, with no terminal value after expiry.

How much money do I need to buy a business?

Often much less than the headline price. Acquisitions are usually funded with a mix of your own equity, bank or asset-based debt, and vendor finance, so the cash you need upfront can be a fraction of the total.

What is a vendor loan note?

A vendor loan note is an arrangement where the seller lends part of the purchase price back to the buyer, repaid over time with interest. It bridges the gap between the price a seller wants and the cash a buyer can raise.

What is normalised EBITDA and why do buyers adjust it?

Normalised EBITDA restates reported earnings to remove one-off items and owner-specific costs, showing the sustainable earning power a buyer would inherit. Buyers adjust it because the multiple is applied to this figure, so it sets the price.