Glossary Terms

The traditional document used in relationships between employees and employers for the purpose of laying out the rights, responsibilities, and obligations of both parties during the employment period.

See business enterprise.

Enterprise value (EV) is a measure of a company’s total value, often used as a more comprehensive alternative to equity market Capitalization. EV includes in its calculation the market Capitalization of a company but also short-term and long-term debt as well as any cash on the company’s balance sheet. EV… Read More »Enterprise Value

Also known as shareholders’ equity, which represents the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all company debt were paid off.

Third-party arrangement to hold and distribute funds (usually by an attorney); agreed upon by both the buyer and the seller.

That amount of anticipated economic benefits that exceeds an appropriate rate of return on the value of a selected asset base (often net tangible assets) used to generate those anticipated economic benefits.

A specific way of determining a value indication of a business, business ownership interest, or security determined as the sum of a) the value of the assets derived by capitalizing excess earnings, and b) the value of the selected asset base. Also frequently used to value intangible assets.

Agency agreement that gives only one broker or brokerage firm the right to sell the business. Seller retains the right to find a buyer independently without having to pay a commission to the listing agent or firm.

Employment agreement and contract giving the broker the right to receive a commission if the property or business is sold by anyone, including the seller, during the term of the agreement.

A strategy to depart an existing situation. The creation of an overall strategy that prepares a business owner and his/her company for the time when that business owner is no longer involved in the operation of the company. Examples of unplanned exits include death, divorce, management disputes, influx of competition,… Read More »Exit Plan