A deferred payment creates a future funding gap

Fictional Acquisition Companion example

This hypothetical uses invented facts and numbers. A buyer and seller agree a £2.1 million fixed price for a fictional business: £1.65 million is due at completion and £450,000 is scheduled 18 months later.

Match the later obligation to available cash

At month 18, the buyer’s planning case shows £380,000 of cash available for the deferred payment after the other needs included in that forecast.

1. Deferred amount due: £450,000.
2. Cash available in the planning case: £380,000.
3. Potential shortfall: £450,000 − £380,000 = £70,000.
4. The payment schedule reconciles to the agreed price: £1,650,000 + £450,000 = £2,100,000.

The £70,000 is a funding gap under these assumptions, not proof that the buyer will miss a payment. Forecast cash can change, and the contract may define conditions, set-off rights or other protections that this simple case omits.

Bring the timing into the decision

Deferred consideration can reduce cash required at completion while creating a later obligation. Model the due date alongside debt payments, working capital and investment needs; then stress-test lower cash generation. The headline price alone does not show whether the payment calendar is supportable. Read deferred consideration with adjusted EBITDA.