Glossary


Asking Price: The total amount for which a business or an ownership interest is offered.

Asset Sale: The means by which a business owner transfers ownership of tangible and intangible assets to another owner without transferring the ownership structure. Normally, an Asset Sale does not include Liabilities, Accounts Receivables, or Cash in Bank.

Blue-Sky: That portion of a requested price that cannot be supported through the application of established valuation methodology and which generates no economic benefit.

Business Broker: An Intermediary dedicated to serving clients and customers who desire to sell or acquire businesses. A Business Broker is committed to providing professional services in a knowledgeable, ethical and timely fashion. Typically, a Business Broker provides information and business advice to sellers and buyers, maintains communications between the parties and coordinates the negotiations and closing processes to complete desired transactions.

Discretionary Earnings: The earnings of a business enterprise prior to the following items:

  • Income taxes
  • Non-operating income and expenses
  • Non-recurring income and expenses
  • Depreciation and amortization
  • Interest expense or income
  • Owner’s total compensation for those services which could be provided by a sole owner/manager

FF&E: Furniture, Fixtures & Equipment that are included in the sale.

Non operating\Noncontributing Asset: An asset unnecessary to the operation of a business enterprise and the generation of its revenues.

Owner: A generic term used in business brokerage to represent the proprietor, general partner or controlling shareholder (singular or plural as appropriate) of a business enterprise.

Owner’s Salary: The salary or wages paid to the owner, including related payroll burden.

Owner’s Total Compensation: Total of an owner’s salary and perquisites after the compensation of all other owners has been adjusted to market value. (See ‘Discretionary Earnings‘.)

Perquisites: Expenses incurred at the discretion of the owner which are unnecessary to the continued operation of the business.

Transaction Value: The total of all consideration passed at any time between the Buyer and Seller for an ownership interest in a business enterprise and may include, but not limited to, all remuneration for tangible and intangible assets such as furniture, equipment, supplies, inventory, working capital, non competition agreements, employment and/or consultation agreements, licenses, customer lists, franchise fees, assumed liabilities, stock options, stock or stock redemptions, real estate, leases, royalties, earn-outs and future considerations.

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