Glossary Terms

An ownership interest greater than 50% of the voting interest in a business enterprise.

Financing an outside manager or management team to acquire a target company. In a management buy-in (MBI) an external management team partners with a company that has a management void. This could be a private company, a stand-alone company or an orphaned division of a larger company. Managers retain operational… Read More »Management Buy-in

A process whereby management of a company acquires all or some of the ownership of the company they manage either independently or in partnership with a private equity fund/group (PEG). Management buy-outs (MBO) are generally pursued by management teams that have little or no ownership in a business and want… Read More »Management Buy-out

A general way of determining a value indication of a business, business ownership interest, security or intangible asset by using one or more methods that compare the subject to similar businesses, business ownership interests, securities or intangible assets that have been sold.

The combination of two or more companies, whether through (1) a pooling of interest in which the accounts are combined (2) a purchase where the amount paid over and above the acquired company’s book value is carried on the books of the purchaser as goodwill or (3) consolidation in which… Read More »Merger

An ownership interest less than 50 percent of the voting interest in a business enterprise.

That price for the assets intended for sale which represents the total consideration most likely to be established between a buyers and seller considering compulsion on the part of either buyer or seller, and potential financial, strategic or non-financial benefits to seller and probable buyer.

Also Known as Enterprise Value (EV) Multiple, is the inverse of the Capitalization Rate. It is usually the ratio of the price to earnings, particularly for public companies. It can also be the ratio of selling price to DE for a small business. A multiple can be used to estimate… Read More »Multiple

With respect to a business enterprise, the difference between total assets (net of accumulated depreciation, depletion, and Amortization) and total liabilities as they appear on the balance sheet (synonymous with Shareholder’s Equity). With respect to a specific asset, the capitalized cost less accumulated Amortization or depreciation as it appears on… Read More »Net book value

This is the net income plus all non-cash charges (depreciation, Amortization and depletion), less amounts needed for capital expenditures, plus/minus net change in working capital, plus/minus changes in debt. (This would be net cash flow for equity.) Invested capital net cash flow would exclude the net change in debt and… Read More »Net cash flow