Definition - What does Consideration Shares mean?
Divestopedia explains Consideration Shares
When consideration shares form part of a transaction structure, the key questions are:
- How is the value of the consideration shares determined, and are the assumptions in this valuation reasonable?
- What is the future value of the shares when they get monetized, and will the eventual return compensate the seller for the associated risk of holding them?
- How easy will it be to monetize the consideration shares in the future?
The seller should also review the buyer's previous history of creating value for its shareholders. While the past is not indicative of the future, a history of success goes a long way in generating confidence that the shares received may actually be worth more when they are sold in the future.
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