The Repayment Period of a typical deferred consideration policy is three to five years.

This time period makes the underwriting risk assessment more accurate. It enables DFL to use and model forecasts of the particular industry in question and the general economy with a higher degree of confidence.

The types of Repayment Profile are infinite and each transaction is different.

In each transaction the Vendor and Purchaser both have their own expectations on what should be repaid and when.

The negotiating of such repayment profiles should only be driven by what the detailed cash flows and financial diligence may indicate with regard to comfortable debt servicing.

Any senior debt lender may not allow repayments to the Vendor until a debt line has been substantially reduced. This creates a longer risk period for the vendor and DFL can structure deferred consideration insurance to fit in exact line with these situations. This will cause higher levels of deferred consideration payments toward the end of a term loan period.

The Vendor does generally also benefit from an interest yield on the loan note and this element of exposure, subject to the underwriter’s agreement, can be insured within the deferred consideration insurance along with the principle.