Glossary · Doing the deal
Adequate consideration
In short
This means there's a fair and reasonable exchange of value in a contract or transaction. It's crucial for ensuring the legality and enforceability of agreements.
What it means in a deal
When structuring your deal, especially with non-competes or consulting agreements, ensure the value exchanged for these promises is clearly documented and considered fair by all parties. This prevents later legal challenges claiming the agreement lacked proper consideration, which could invalidate it.
Related terms
Common questions about Adequate consideration
- If the acquired business has minimal hard assets, how does the SBA ensure adequate collateral?
- Can an SBA 7(a) loan be denied if the seller refuses to provide adequate financial disclosures during due diligence?
- What specific considerations apply to valuing goodwill and intangible assets in a 7(a) change-of-ownership transaction?
- What are the key considerations for a lender when approving a material change in the borrower's business entity structure (e.g., sole proprietorship to LLC) during servicing?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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