Educational only. Not legal, tax, or financial advice. NewHands is not a broker-dealer. Verify state rules with counsel before you rely on them.
Glossary
The words Main Street deals actually use.
This is educational. Definitions here are plain language, not statutes.
SDE. Seller's discretionary earnings. Profit plus owner compensation and certain personal or one-time costs, minus a replacement wage when the buyer will not do the job.
EBITDA. Earnings before interest, taxes, depreciation, and amortization. More common once a company has a management layer and the owner is not the whole adjustment.
Multiple. Asking price divided by SDE or EBITDA. Real estate should be stated beside it, not buried inside it, or the multiple lies.
Add-back. A cost in the statements that a buyer is asked to ignore. It needs evidence.
DSCR. Debt-service coverage ratio. Cash flow divided by the year's loan payments.
IOI / LOI. Indication of interest, then letter of intent. The second one is the document counsel argues about.
CIM. Confidential information memorandum. The story behind the teaser, after an NDA.
QoE. Quality of earnings. A CPA's review of whether the earnings are real.
Asset sale / stock sale. What is being bought. See the tax primer. It changes liabilities and taxes.
7(a). An SBA loan program often used to buy a small company. The lender decides. NewHands does not.
Teaser. The public card. Enough to decide to sign an NDA, not enough to call the largest customer.
Sources
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