Glossary Terms

Organization that contributes to the total enrichment and advancement of the business brokers who are members.

A commercial, industrial, service, or investment entity (or a combination thereof) that provides goods and/or services in pursuit of economic gains.

A disclosure document that provides information about an investment offering to the public and that is required to be filed with the Securities and Exchange Commission (SEC) or local regulator. A business prospectus contains information about the company, its management team, recent financial performance, risks and other related information that… Read More »Business Prospectus

The degree of uncertainty of realizing expected future returns of a business resulting from factors other than financial leverage. See Financial Risk.

A process and a set of procedures used to estimate the economic value of an owner’s interest in a business. Valuation is used by financial market participants to determine the price they are willing to pay or receive to effect a sale of a business. See Broker’s Opinion of Value.

Process in which the broker learns the needs and qualifications of a potential buyer.

The composition of the invested capital of a business enterprise and the amount of debt and/or equity employed by a firm to fund its operations and finance its assets. It may also include information about stock, options, warrants and who owns or contributed them.

(1) the conversion of a single period of income into value (2) the capital structure of a business enterprise (3) the recognition of expenditure as a capital asset vs. a periodic expense

Any divisor (usually expressed as a percentage) used to convert anticipated economic benefits of a single period into a value.

A method of accounting wherein income and expenses are recognized, within the statements, when the business receives the income, or pays the expense. (Also see Accrual Basis Accounting.)