The words in the deal, defined.
Plain definitions, why each term matters in BC, and how it shows up in practice.
- Confidential information memorandum (CIM)A CIM is the document that presents a business for sale to qualified buyers after they sign an NDA, covering operations, financials and the opportunity
- Due diligenceDue diligence is the buyer's investigation of a business before closing, verifying the financials, contracts, staff, assets and risks described
- Earn-outAn earn-out is part of a business purchase price paid later, and only if the business hits agreed targets after closing, common in BC deals
- Feasibility studyA feasibility study tests whether a business idea, expansion or acquisition can work before money is committed, covering demand, costs, capital and risks
- HoldbackA holdback is part of the purchase price kept in escrow after closing to cover claims if the seller's representations about the business prove untrue
- Letter of intent (LOI)A letter of intent sets out the price, structure and key terms a buyer and seller have agreed before due diligence and the final purchase agreement
- Management buyout (MBO)A management buyout is the purchase of a business by the managers who run it, usually financed with their equity, bank debt and a vendor take-back
- Non-compete agreementA non-compete stops a business seller from competing with the business they sold for a defined time and area, protecting the goodwill the buyer paid for
- Normalised EBITDANormalised EBITDA is operating profit before interest, tax, depreciation and amortisation, adjusted to show what a buyer would actually earn
- Seller's discretionary earnings (SDE)SDE is the total financial benefit one owner-operator takes from a small business in a year, used to value Main Street companies in BC
- Share sale versus asset saleThe two ways to buy a company in BC: buy its shares and take everything, or buy selected assets and leave the rest with the seller's corporation
- Succession planA succession plan sets out who will lead and own a business after the current owner steps back, how the transfer is funded and what happens if plans change
- Valuation multipleA valuation multiple is the number applied to a business's earnings to estimate its value, reflecting risk, growth and comparable sales in BC
- Vendor take-back (VTB)A vendor take-back is seller financing: part of the price is lent by the seller to the buyer and repaid over time, usually with interest and security
- Working capital pegA working capital peg is the agreed normal level of receivables, inventory and payables a seller must deliver at closing, with a price adjustment
Start with a confidential conversation.
Tell Ali where the business is and what you want to happen next. You leave with a straight read on value, timing and the two or three moves that matter, whether or not we work together.