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Although a seller of a business is most likely to want to receive cash at completion, a buyer of a business is more likely to be concerned with minimising risk and maximising cash-flow. Consequently, the transaction should be structured to satisfy both the buyer and the seller.

An initial cash payment on completion can be combined with an element of deferred consideration, such as payment by way of instalments.

In addition a retention can used as a form of security against the risk that the assumptions on which the purchase price has been calculated prove to be inaccurate, if these lead to a breach of warranty or an indemnity claim. However, warranties and indemnities may well be more limited in an asset purchase if the liabilities relating to those assets are to remain with the seller.

Should a key concern of the buyer be the smooth transfer of the assets and business then an earn-out arrangement could also be considered. The aim here would be to align the interests of the buyer and the seller in terms of promoting the success of the business and maximising future profits.

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