DEFINITIONS OF TERMS USED BY BUSINESS BROKERS:

Business Broker - assist buyers and sellers of privately held small business in the buying and selling process. They typically estimate the value of the business; advertise it for sale with or without disclosing its identity; handle the initial potential buyer interviews, discussions, and negotiations with prospective buyers; facilitate the progress of the due diligence investigation and generally assist with the business sale.

Cash Flow - profit after principal and interest are deducted from net operating income (NOI). Cash Flow is not the same thing as profit or net.

Confidentiality Agreement - a pact that forbids buyers, sellers and their agents in a given business deal from disclosing information about the transaction to others.

Contingencies - in a buy-sell agreement are conditions which must be met if the contract is to be performed.

Dual Agency - occurs when the same brokerage represents both the seller and the buyer under written agreements.

Due Diligence - in various industries is the process through which a potential acquirer evaluates a target company or its assets for an acquisition.

M & A (mergers and acquisitions) - business brokers do participate in mergers and acquisitions activities when it involves a transaction between two or more smaller companies. Business brokers and M&A firms do overlap activities in the extremes of their market.

NDA (non-disclosure agreement) - also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement, is a contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another.

NNN - triple net lease. Is a lease agreement where the tenant is responsible for paying all real estate taxes, building insurance and maintenance.

Representation Agreement  (A listing contract) -  is a contract between a real estate broker (or their agent representatives, acting in the broker's name) and a seller or sellers of real property to give the broker the right to offer the property or business for sale.

SBA - Small Business Administration.

SBA bank ratings;

     GP - (General Program) This is the lowest rating and is given to a lender who knows little about the SBA process.

     CLP - (Certified Lender Program) This process is for the more experienced lender who have graduated beyond the GP       status.

     PLP - (Preferred Lender Program) This is the top designation and enables the respective lenders to approve their own loans with no additional underwriting by the SBA.

Stock Salethe buyer purchases stock in a company that may have unknown or uncertain liabilities.

 

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