SMB M&A Glossary
Every term in buying and selling private businesses, defined plainly — from the valuation figures a price is built on to the mechanics of a close.
In short367 terms across valuation, financing, diligence, deal structure, and closing — the working vocabulary of small-business acquisitions.
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A
Absentee OwnerAccounts Receivable AgingAccredited InvestorAccrual AccountingAcqui-HireADA ComplianceAdd-BacksAdd-On Acquisition (Bolt-On)Adjusted EBITDAAggregatorAllocation of Purchase Price (Form 8594)Amortization ScheduleAntitrust ReviewARR (Annual Recurring Revenue)Asking PriceAsset ListingAsset Purchase Agreement (APA)Asset SaleAsset StrippingAsset-Based Lending (ABL)Asset-Based ValuationAssignment of ContractsAssignment of LeaseAuction Process
B
Balloon PaymentBest and Final OfferBid DeadlineBill of SaleBlind ProfileBlue Sky ValueBoard ConsentBook ValueBreakup FeeBridge LoanBulk Sales LawBusiness BrokerBusiness OpportunityBusiness-for-Sale MarketplaceBuy-Sell AgreementBuy-Side AdvisorBuyer PersonaBuyer QualificationBuyer RemorseBuyer-Seller Meeting
C
CAC (Customer Acquisition Cost)CapEx (Capital Expenditures)Capital Gains TaxCapital StackCapitalization of EarningsCapitalization RateCarve-OutCash Basis AccountingCash Flow Available for Debt ServiceCash-Free Debt-FreeCertificate of Good StandingCertified Business Intermediary (CBI)Change ManagementChange of Control ClauseChurn RateClean RoomClosingClosing ConditionsClosing CostsClosing DateClosing StatementClub DealCo-BrokerageCo-InvestmentCOBRA ContinuationCollateralCommission SplitCommitted CapitalComparable SalesComps (Comparable Transactions)Conditions PrecedentConfidential Information Memorandum (CIM)Confidential SaleConfidentiality Agreement (NDA)Consulting AgreementContribution MarginCorporate DevelopmentCorporate ResolutionCosignerCost SynergiesCovenantsCustomer ConcentrationCustomer Retention
D
Data RoomDays on MarketDeal AlertDeal BookDeal FatigueDeal FlowDeal KillerDeal SourcingDeal StructureDebt Service Coverage Ratio (DSCR)Debt YieldDebt-to-EBITDADeferred PaymentDeferred RevenueDefinitive AgreementDepreciation & AmortizationDepreciation RecaptureDirect LendingDisclosure SchedulesDiscount RateDiscounted Cash Flow (DCF)Discretionary ExpensesDistressed SaleDivestitureDouble LehmanDown PaymentDrag-Along RightsDry PowderDSO (Days Sales Outstanding)Due DiligenceDue Diligence Checklist
E
EarnoutEBITEBITDAEBITDA MultipleEIN TransferEmployment AgreementEngagement LetterEnterprise ValueEntrepreneurship Through Acquisition (ETA)Environmental Site Assessment (Phase I ESA)Equity InjectionEquity RolloverEquity ValueERISAEscheatmentEscrowEscrow AgentEscrow HoldbackExcess Earnings MethodExclusive ListingExclusivity (No-Shop Clause)Exit PlanningExit Strategy
F
G
H
I
I-9 ComplianceIBBA (International Business Brokers Association)IndemnificationIndemnification BasketIndemnification CapIndependent SponsorIndication of Interest (IOI)Installment SaleInstallment Sale Taxation (Section 453)Intangible AssetsIntegrationIntercreditor AgreementInterest-Only PeriodIntermediaryInventory at CostInventory TurnoverInvestment Banker
J
K
L
Landlord ConsentLeague TablesLeaseholdLehman FormulaLetter of Intent (LOI)LeverageLeveraged Buyout (LBO)Licenses and PermitsLien SearchLimited AuctionLimited Partner (LP)Liquidation ValueLiquor License TransferList-to-Sale RatioListingListing AgreementLitigation HoldLoan CovenantLoan OriginationLoan-to-Value (LTV)Lower Middle MarketLTV (Customer Lifetime Value)
M
M&A AdvisorM&A SourceMain Street BusinessMaintenance CapExMajority RecapitalizationManagement Buy-In (MBI)Management Buyout (MBO)Management DepthManagement PresentationMaterial Adverse Change (MAC)Merchant Cash AdvanceMergerMezzanine DebtMiddle MarketMinority InvestmentMRR (Monthly Recurring Revenue)Multiple ArbitrageMultiple Expansion
N
O
P
Permanent CapitalPersonal Financial Statement (PFS)Personal GuaranteePlatform AcquisitionPocket ListingPointsPost-Closing AdjustmentPost-Merger Integration (PMI)Post-Money ValuationPre-ApprovalPre-Money ValuationPre-QualificationPrecedent TransactionsPrepayment PenaltyPrime RatePrivate CreditPrivate Equity FirmPro Forma FinancialsPromissory NoteProof of CashProof of FundsProprietary Deal FlowPurchase AgreementPurchase Price Allocation
Q
R
Re-TradingReal Estate IncludedRecapitalizationRecast FinancialsRecurring RevenueRepresentations and WarrantiesReps & Warranties Insurance (RWI)Retainer FeeRevenue ConcentrationRevenue MultipleRevenue SynergiesReverse MergerRevolver (Line of Credit)Right of First Offer (ROFO)Right of First Refusal (ROFR)ROBS (Rollovers as Business Startups)Roll-UpRollover EquityRound One BidsRule of Thumb ValuationRun Rate
S
Sales Tax ClearanceSaved SearchSBA 504 LoanSBA 7(a) LoanSBA Express LoanSBA GuarantySBA LoanSBA Preferred Lender (PLP)SBA SOPSDE (Seller's Discretionary Earnings)SDE MultipleSearch FundSearcherSection 1202 (QSBS)Section 338(h)(10) ElectionSelf-Funded SearchSell-Side AdvisorSeller FinancingSeller NoteSeller RemorseSeller Take-BackSemi-AbsenteeSenior DebtShareholder AgreementSite VisitSOFRSophisticated InvestorSpringing CovenantStalking Horse BidStandard Operating Procedures (SOPs)Standby AgreementStay BonusStep-Up in BasisStock Purchase Agreement (SPA)Stock SaleStrategic BuyerSubordinated DebtSubordination AgreementSuccess FeeSuccession PlanningSuccessor LiabilitySupplier NovationSurvival PeriodSyndicateSynergies