Valuation Terms

Purchase Price

The amount the buyer agrees to pay for the business. Why it matters: Purchase price only tells part of the story; timing of payment, seller notes, earnouts, rollover equity, escrows, and taxes can change the real value of the offer.

Related terms

Rollover Equity

When the seller keeps part of their ownership in the business after the sale, hoping it grows and becomes worth more later. Why it matters: Rollover equity lets a seller participate in future upside, but it also means taking risk alongside the new owner.

Seller

The current business owner who wants to sell the business. Why it matters: The seller is not just handing over ownership; they are also proving the business, answering diligence requests, negotiating risk allocation, and often helping with transition.

Buyer

The person, company, investor, or fund trying to buy the business. Why it matters: Different buyers value different things, so knowing the buyer type helps an owner understand likely questions, risks, financing needs, and negotiation style.

More from Valuation Terms

Add-Backs Adjusted EBITDA CapEx Cash Flow EBITDA Enterprise Value Equity Value Free Cash Flow Gross Margin Gross Profit Multiple Net Income

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