ValuationDeal Structure
Purchase Price vs. Total Consideration
Also known as: Total deal consideration, all-in purchase consideration, cash-at-close vs. total package
Purchase price is the headline number a buyer names. Total consideration is the full gross value of everything the buyer gives — cash at close plus seller notes, rollover equity, earnouts, and assumed debt — so a $40M total-consideration deal might be only $20M cash at closing.
WHY IT MATTERS
A headline "$40M deal" can mean very different things. At one end: $40M cash at closing, no strings attached. At the other end: $20M cash, $10M seller note paid over 5 years, $5M rollover equity locked up until the next exit, $5M earnout contingent on hitting aggressive EBITDA targets. Same headline number; radically different real value. The difference between purchase price and total consideration is one of the biggest reasons founders misjudge offers. Always evaluate the net-present-value of total consideration, with probability weighting on the contingent pieces.