An intangible asset associated with the acquisition of a company. This is normally carried on the acquiring company’s balance sheet, and is the portion of the purchase price allocated to...

The total revenue minus the cost of goods sold, or the profit a company makes after deducting the direct costs of goods from the total revenue.

An analysis and evaluation of the market prices of publicly traded companies which are engaged in similar lines of businesses to help determine the value of the subject company.

An informal term referring to a reduction in purchase price taken by the seller to facilitate a transaction.

An amount of the purchase price that is held by a neutral third party in a separate account for a period of time after the closing to satisfy any of...

An acquisition by a competitor or another company in the same market sector.

A minimum rate of return required before an investor will make an investment.

A provision in the purchase agreement that allows a buyer to seek recourse against the seller for losses suffered due to breaches of representations and warranties (reps & warranties).

The first public sale of the stock of a formerly privately held company.

When the purchaser of a business pays the seller over several years, allowing the tax liability on any gain to be spread over the same period of time instead of...

A business’ legally protectable intangible assets, including patents, copyrights, trade names, domain names, trade secrets, and trademarks or service marks.

The interest rate, which is applied to a stream of cash flows, that causes the sum of the outflows and inflows to equal zero.

A sale of a business to an insider, such as a family member, an employee, or partner.

Products held for resale to a company’s customers.

An employee who is critical to the success of a business.

A formula used by investment bankers and M&A advisors to calculate the amount of compensation due upon a successful transaction.

A preliminary agreement that outlines the essential terms of an acquisition and signifies the parties’ commitment to start due diligence and begin working toward a purchase agreement.

A form of business that is normally taxed as a partnership and shields its owners from responsibility for business debts.

A partner in a company who is not liable for losses beyond their original investment and who is protected from legal actions. This term often refers to a limited partner...

The segment of the business landscape made up of small “mom-and-pop” businesses such as restaurants, coffee shops, landscaping companies, auto and truck service centers, convenience stores, most franchises, and small...

A method for buying a company whereby an external management team acquires a company, often with the financial assistance of a sponsor, such as a private equity group.

The acquisition of a company by its existing managers, typically a leveraged transaction, which often uses the assets or future cash flows of the company as collateral for financing the...

The price at which a company or an asset can be sold.

A legal provision found in a letter of intent or purchase agreement that enables the acquirer to back out of the transaction if the seller suffers adverse events before the...

Combination of two or more companies into one with a single identity, typically that of the larger or largest of the companies.

A confrontation between two parties in which neither can advance or retreat without sacrificing their negotiating position.

The segment of the business landscape made up of mid-sized businesses, such as manufacturing firms, distribution companies, wholesalers, and large service-based companies. The middle market is further divided into the...

An ownership position having less than 50% of the voting interest in an enterprise.

A fraudulent or negligent misstatement, or an incomplete statement of a material fact to induce a contract.

Amount of money earned after deducting from the gross revenues of a business all expenses, including overhead, employee salaries and benefits, manufacturing costs, inventory costs, distribution costs, and marketing and...

Having no legal or binding force.

A contract that limits the seller or key employees from competing with the business after the closing.

A legal contract between at least two parties that outlines confidential material, knowledge, or information that both parties want to share with each other for specific purposes but with restricted...

Property or goods owned by a company that are not necessary to the ongoing operations of the business enterprise.

Income or revenue not related to the typical activities of the business.

An agreement signed by employees and management whereby they agree not to solicit customers or other employees of the company regarding job opportunities, upon termination of their employment agreement.

The process of adjusting, normalizing, or recasting a business’s financial statements to determine the true earnings (i.e., SDE or EBITDA) of a company.

Financial statements that have been adjusted by adding back discretionary expenses (non-essential to operations) to net pre-tax operating profit to estimate a company’s economic cash flow (i.e., SDE or EBITDA),...

The internal document used to establish rules for governing a limited liability company (LLC).

Tax on income other than long-term capital gains.