Which term describes payments made beyond the initial purchase price in a business acquisition?

The term that describes payments made beyond the initial purchase price in a business acquisition is "Earnout." An earnout is essentially a financial arrangement in which the seller of a business receives additional compensation based on the future performance of the business after the acquisition has taken place. This type of arrangement aligns the interests of both the buyer and seller, as the seller can earn a higher total payout if the business performs well post-acquisition.

This structure can be beneficial in situations where there is uncertainty about the company's future revenue or profitability, allowing the buyer to mitigate risk while incentivizing the seller to help ensure the success of the business after the sale. It also reflects the potential value that the seller believes the business can achieve, which may not be fully evident at the time of sale.