With Jerome Sinclair joining Watford on the expiry of his Liverpool contract this summer, the Reds are set to land £4 million in return.
The 19-year-old opted to move to Vicarage Road ahead of 2016/17, and has signed a five-year deal with the Hornets.
As Sinclair is under the age of 24, Liverpool were entitled a compensation fee for their role in his development, risking the possibility of a lengthy tribunal.
But following what the club described as “amicable and professional discussions,” a fee of £4 million has been agreed.
Taking to Twitter shortly after his move was confirmed, Sinclair thanked the club for “a great experience.”
“I’d like to thank everybody at Liverpool for all the support and making my five years at the club such a great experience,” he said.
“I’m proud to have been able to represent a great club and I’d like to wish all the staff and the team all the best for future!
“For me it’s an exciting new chapter and I can’t wait to get started with Watford.”
Sinclair joined Liverpool from West Bromwich Albion as a 14-year-old in 2011, and became the club’s youngest-ever player when he featured against his former side in 2012, six days after his 16th birthday.
But discussing possible contract talks with the youngster back in January, Klopp suggested that Sinclair’s wage demands would become an issue, stressing an emphasis on development.
“What we try to do is create a situation where younger players know it is not important to get the highest wages in your life in the first year of your career,” he said.
“It is more important to get the real education and that is what we want to try.
“First of all you need young players who want to learn and if we can create a situation where they feel it is the right place to learn then everything is good.”
But Sinclair will now compete with Troy Deeney and Odion Ighalo for a role in Walter Mazzarri’s attack at Watford.