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Basket purchases involve acquiring a collection of assets at a lower price than buying them separately. The cost of each asset is allocated based on current fair market values and a discount is applied. This strategy is used in various business transactions and can benefit both the seller and buyer.
Also known as all-in purchases, basket purchases are acquisitions involving a collection of assets, rather than the purchase of a single asset. This approach often results in the ability to acquire several assets at a lower price than would be possible by purchasing them separately. With a basket purchase, the cost of each asset in the group is normally allocated based on current fair market values and the application of a discount as part of the incentive to make the all-in purchase. The use of the basket buying strategy is common in numerous business transactions, with the idea used by retailers, service providers, real estate agents, wholesalers, and virtually any type of selling situation.
For example, a basket purchase for a business may involve several different assets that must be acquired in order to fully acquire everything needed to remain in operation. The deal may require the purchase of the property on which the business is located, along with a storage warehouse located on a separate building. At the same time, the equipment used to produce the goods must also be purchased. The prospective owner may also want to buy the raw materials used in the production, especially if the idea is to continue the operation of the plant during the acquisition process.
Rather than purchasing each of these assets separately, the owner provides the buyer with a lump sum or basket purchase price to acquire all the necessary assets in one simple transaction, rather than entering into a series of transactions. In exchange for buying all the assets as part of a deal, the owner also extends a slight discount to the market value of each asset included in the purchase. This allows the buyer to save a significant amount of money, while still acquiring everything needed to continue the operation.
The idea of a cart purchase can be applied in any number of different settings. People who sell home items like furniture can offer discounts to prospective buyers if they commit to buying a dining suite along with the living room suite. Similarly, companies offering various types of communications services may use what is known as bundling, which is simply a bundle purchase of two or more services in order to get a lower overall price for those services. In any application where a basket purchase is made, the seller has the advantage of moving products with fewer transactions involved, and the buyer has the advantage of obtaining desirable products at a lower price than purchasing those same products individually.
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