Business terms
Plain-language definitions for buying, running, valuing, and selling a business.
Big Picture Deal Terms
- Acquisition
- Advisor
- Business Broker
- Buyer
- Exit
- Family Office
- Financial Buyer
- Independent Sponsor
- Investment Banker
- M&A
- M&A Advisor
- Private Equity Firm
- Search Fund
- Seller
- Strategic Buyer
Valuation Terms
- Add-Backs
- Adjusted EBITDA
- CapEx
- Cash Flow
- EBITDA
- Enterprise Value
- Equity Value
- Free Cash Flow
- Gross Margin
- Gross Profit
- Multiple
- Net Income
- Net Working Capital
- Purchase Price
- QoE Report
- Quality of Earnings
- Revenue
- SDE
- Valuation
- Working Capital
Preparing to Sell
- Auction Process
- Blind Profile
- Confidential Information Memorandum
- Data Room
- Deal Timeline
- Due Diligence Checklist
- Management Presentation
- Process Letter
- Proprietary Deal
- Sell-Side Readiness
- Teaser
Buyer Interest and Offers
- Binding Terms
- Breakup Fee
- Confidentiality Agreement
- Exclusivity
- Indication of Interest
- IOI
- Letter of Intent
- LOI
- NDA
- No-Shop Clause
- Non-Binding
Deal Structure
- Asset Sale
- Cash at Close
- Cash-Free Debt-Free
- Contingent Payment
- Debt-Like Items
- Earnout
- Escrow
- Holdback
- Majority Sale
- Membership Interest Sale
- Minority Rollover
- Minority Sale
- Purchase Price Adjustment
- Recapitalization
- Rollover Equity
- Seller Financing
- Seller Note
- Stock Sale
Financial Due Diligence
- Accounts Payable
- Accounts Receivable
- Accrual Accounting
- AP Aging
- AR Aging
- Balance Sheet
- Bank Reconciliation
- Budget
- Cash Flow Statement
- Cash-Basis Accounting
- Chart of Accounts
- Customer Deposits
- Deferred Revenue
- Financial Statements
- Forecast
- General Ledger
- Income Statement
- Inventory
- Inventory Obsolescence
- Normalized Earnings
- One-Time Expense
- Payroll Tax Exposure
- Profit and Loss Statement
- Projection
- Revenue Recognition
- Run Rate
- Sales Tax Exposure
- Tax Liability
- Tax Returns
- Trailing Twelve Months
- TTM
- Variance
- Year-to-Date
- YTD
Legal Due Diligence
- APA
- Asset Purchase Agreement
- Assignment
- Basket
- Change of Control
- Consent
- Covenant
- Definitive Agreement
- Disclosure Schedule
- Encumbrance
- Indemnification
- Indemnity Cap
- Lien
- MAE
- Material Adverse Effect
- Membership Interest Purchase Agreement
- Non-Compete Agreement
- Non-Solicit Agreement
- Purchase Agreement
- Representations and Warranties
- Reps and Warranties
- Restrictive Covenant
- SPA
- Stock Purchase Agreement
- Survival Period
Operations Due Diligence
- Contractor
- Employee Classification
- Employee Handbook
- Exempt Employee
- Key Person Risk
- Management Team
- Non-Exempt Employee
- Organizational Chart
- Owner Dependence
- Retention
- SOPs
- Standard Operating Procedures
- Stay Bonus
- Training Period
- Transition Services
- Turnover
Customer and Sales Due Diligence
- Backlog
- CAC
- CLV
- Conversion Rate
- Customer Acquisition Cost
- Customer Churn
- Customer Concentration
- Customer Lifetime Value
- Lead
- Net Revenue Retention
- NRR
- One-Time Revenue
- Pipeline
- Prospect
- Recurring Revenue
- Retention Rate
- Revenue Concentration
- Sales Funnel
Contracts and Vendor Due Diligence
- Auto-Renewal
- Customer Contract
- Exclusivity Agreement
- Lease
- Material Contract
- Most Favored Nation Clause
- Notice Period
- Personal Guarantee
- Service Level Agreement
- SLA
- Termination Clause
- Vendor Contract
Technology and Data Due Diligence
- Backup
- Copyright
- Cybersecurity
- Data Breach
- Data Privacy
- Domain Name
- Intellectual Property
- IP
- Open-Source Software
- Patent
- Personally Identifiable Information
- PII
- Software License
- Trade Secret
- Trademark
Financing and Debt Terms
- Amortization
- Debt Financing
- Default
- Equity Financing
- Interest Rate
- Lender
- Maturity Date
- Mezzanine Debt
- SBA Loan
- Senior Debt
- Subordinated Debt
- Term Sheet
Closing Terms
- Bill of Sale
- Bring-Down Certificate
- Closing
- Closing Conditions
- Closing Date
- Closing Statement
- Funds Flow
- Payoff Letter
- Post-Closing Adjustment
- Secretary Certificate
- Wire Transfer
Transition and Post-Sale Terms
- Consulting Agreement
- Day One Plan
- Employment Agreement
- Integration
- Knowledge Transfer
- Post-Closing Covenant
- Transition Period