Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Purchase Price

Definition

The final price for a business that is paid at closing.

Example

A seller could ask $100 million for his hot dog stand, though the actual purchase price may be an altogether different matter.

Tips

Asking price is the price that the seller initially asks, whereas purchase price is the price that the parties actually agree to. Some sellers mistakenly attempt to estimate the value of their business based on the asking prices for similar businesses on the market. This is a fallacy, as anyone can ask any asking price they want.