Purchase Consideration

Learn about purchase consideration, its meaning, components, and methods for accurate calculation.Top of FormBottom of Form
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Purchase Consideration
OPEN FD
4 min
26-August-2025

In simple terms, purchase consideration is the amount paid by one company to acquire another business or its assets. It ensures shareholders of the selling entity are compensated fairly and the acquiring company records the transaction transparently. Depending on the deal, it can be settled through cash, shares, debentures, or a mix of these instruments.

Just as companies structure deals carefully, you can structure your savings smartly with Bajaj Finance Fixed Deposits, offering up to 7.30% p.a. for senior citizens and up to 6.95% p.a. for customers below 60 years. Open FD account.

How is purchase consideration determined?

Determining purchase consideration involves evaluating both the assets and liabilities of the target company. Common methods include:

  • Net assets method – Value = Fair value of assets – Liabilities.
  • Net payment method – Based on the total amount paid (cash/shares/debentures), without focusing on asset valuation.
  • Intrinsic valuation – Takes into account market trends, future earning potential, and goodwill for a holistic calculation.

Looking for an investment where valuation is simple? With a Bajaj Finance FD, you know your returns in advance, free from any market fluctuations. Check latest rates.

Fixed Deposit

  1. Trusted by over 5 lakh customers
  2. Fixed Deposits worth more than Rs. 50,000 crore booked
  3. Rated CRISIL AAA/STABLE and [ICRA]AAA(STABLE)
  4. Up to 0.35% p.a. extra interest offered for senior citizens
  5. Flexible interest payout options available - Monthly, Quarterly, Half-yearly, Annually or at Maturity

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Forms of purchase consideration

The structure of consideration depends on the agreement between the two companies. Common forms include:

  • Cash consideration – Straightforward payment in cash.
  • Share-based consideration – Acquirer issues shares to the seller’s shareholders.
  • Debenture-based consideration – Payment is made through long-term debt instruments.
  • Hybrid consideration – A flexible mix of cash, shares, and debentures.

Flexibility matters in both business and personal finance. Bajaj Finance FDs offer monthly, quarterly, half-yearly, yearly and cumulative payout options, so you can tailor your returns to your needs. Book FD.

Fixed deposit variants

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Fixed Deposit - 60 Months

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Fixed Deposit - Senior Citizen

INTEREST RATES UP TO
7.30% p.a.
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Fixed Deposit - Age below 60

INTEREST RATES UP TO
6.95% p.a.
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Fixed Deposit - Minor

INTEREST RATES UP TO
6.95% p.a.
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Fixed Deposit - HUF

INTEREST RATES UP TO
6.95% p.a.
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Fixed Deposit - Sole Proprietor

INTEREST RATES UP TO
6.95% p.a.
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Impact of purchase consideration on financial statements

Every acquisition affects the financial health of both companies. Key impacts include:

  • Balance sheet – Assets and liabilities of the acquired entity get added to the acquirer’s balance sheet.
  • Profit & Loss account – Goodwill, restructuring costs, and revaluations impact profitability.
  • Equity structure – Issuing new shares changes ownership and reserves.
  • Cash flow statements – Cash-based deals affect liquidity, while non-cash deals impact financing activities.

For individuals, managing liquidity is just as important. Bajaj Finance FD allows premature withdrawals (with nominal charges) so you are never short on cash during emergencies. Open FD.

What does purchase consideration include?

Purchase consideration is not just about the price tag—it’s a mix of multiple components:

  • Fair value of assets – Land, buildings, machinery, goodwill, trademarks, etc.
  • Outstanding liabilities – Existing debts or obligations assumed by the acquirer.
  • Payment mechanism – Whether in cash, shares, debentures, or a hybrid mode.

Just like businesses evaluate assets carefully, you can grow yours confidently with Bajaj Finance FDs that come with the highest safety ratings – AAA by CRISIL and ICRA. Check eligibility.

Conclusion

Purchase consideration forms the backbone of mergers and acquisitions, ensuring fair valuation, transparency, and compliance. It directly impacts financial statements, tax liabilities, and shareholder confidence. For businesses, structuring the right mix of payment mechanisms is essential for a smooth deal.

Similarly, for individuals, the right investment strategy can make all the difference. While EPF, PPF, or equities may serve long-term goals, pairing them with Bajaj Finance Fixed Deposits ensures steady growth, guaranteed returns, and liquidity when you need it most.

Calculate your expected investment returns with the help of our investment calculators

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Frequently asked questions

What is the form of purchase consideration?
Purchase consideration refers to the payment made by an acquiring company to purchase another business. It can take various forms, including cash payments, share exchanges, debentures, or a combination of these. The chosen form affects financial structuring, shareholder value, and tax implications in a merger or acquisition.

What is total purchase consideration?
Total purchase consideration is the final amount paid by the acquiring company to acquire a business. It includes the fair value of assets, liabilities assumed, and any additional payments like goodwill. Proper valuation of total purchase consideration ensures transparency, accurate financial reporting, and a smooth transition during business acquisitions.

Why choose a Bajaj Finance FD over other savings options?

Unlike market-linked instruments, Bajaj Finance FDs guarantee fixed returns up to 7.30% p.a., making them an excellent option for risk-averse investors. Open FD. 

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or referhttps://www.bajajfinserv.in/fixed-deposit-archivesThe company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For theFD calculatorthe actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.

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