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 - are conditions which must be met if a 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.

 

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