The ratio of returns in the form of cash related to the total amount of cash invested, expressed as a percentage.

A provision in an agreement that prevents the agreement from being transferred if there is a change of control.

The actual date that possession of a business changes hands.

A company that has been sold which has similar characteristics to a company that is being valued.

An examination of a business’s accounting records by an accounting firm.

A selling document that is compiled by a business broker, M&A advisor, or investment banker to generate interest about a company from prospective buyers.

The premium buyers are willing to pay to acquire a controlling share in a business.

A general term that refers to a collection of the following documents for an entity: Articles of Incorporation or Organization, Shareholder's Agreement, Buy-Sell Agreement, Bylaws, Minutes of Meetings.

The original cost of an asset as it appears on the balance sheet.

Direct costs or expenses for producing the goods or services sold by a company.

The degree to which a customer or group of customers accounts for a percentage of a company’s total sales.

A central location for due diligence materials provided by a company to potential buyers for the purpose of inspecting confidential data and materials in connection with the acquisition of a...

The legal method of structuring a transaction -- either as an asset sale, stock sale, or merger.

An annual tax deduction that allows for the loss of value of a capital asset, such as a business vehicle or real estate improvement, due to wear over a period...

A discount taken when valuing an interest in a privately held business to account for lack of control, typically due to a minority interest.

An amount or percentage deducted to account for the inability to easily sell the shares of a privately held business and the difficulty in converting those shares to cash.

The interest rate used in a discounted cash flow (DCF) analysis to determine the present value of a series of future cash flows.

A valuation method that measures the value of the future expected net cash flows of a business in present-day dollars.

A cash payment made to an owner or shareholder of a company.

Corporation earnings distributed to shareholders.

A fictitious business name, which allows a company to do business under a different name than the name of its legal entity.

The taxation of income twice, once at the corporate (entity) level as income tax and once at the individual level, when dividends are paid to shareholders.

The thorough verification and investigation of a business after a letter of intent is accepted to determine if the parties wish to proceed with the transaction.

An agreement whereby the buyer pays part of the purchase price to the seller based on the future performance of the company, or the fulfillment of some other specified event.

A measurement of the operating profit of a company. It stands for earnings before interest and taxes.

A measurement of the cash flow of a company which includes earnings before interest, taxes, depreciation, and amortization.

An equity plan established by a company that permits the grant of options on stock of the company as long-term incentive compensation for employees.

A measurement of a company’s total value, calculated as equity minus cash plus outstanding debt.

A separate, legal entity authorized to act separately from its owners, such as a C Corporation, S Corporation, or LLC.

A provision in an agreement, such as a term sheet or letter of intent, in which the prospective seller agrees not to solicit offers or negotiate with other potential buyers...

A plan prepared by a business owner or third party to ensure a successful exit from a business.

The sale of a business to someone who is not a family member of the owner or to someone who is not currently involved in the business.

The amount at which property would change hands between a willing seller and a willing buyer when neither is acting under compulsion and when both have reasonable knowledge of the...

A standard of value that is similar to fair market value, but no discounts are applied, such as discounts for lack of control or lack of marketability.

Financial structuring of a company or particular transaction to increase returns.

Costs that do not fluctuate with changes in revenue.

The manager(s) of a venture capital or private equity fund, who are compensated based on the returns made on investments by the fund.

The common set of principles, standards, and procedures established by the Financial Accounting Standards Board (FASB) that companies use to compile their financial statements.

A clause included in a letter of intent that permits the seller to continue marketing their company for sale and negotiating with prospective buyers.