Page 28 - SEll Your Business Booklet

Language guide ACCRUAL ACCOUNTING EBIT MBO
While we’ve done Income and expenses are Earnings before interest Management buy-out –
and tax.
entered into the books at
the company is bought by
our best to use plain the time of sale, instead of existing management.
English in this guide, when payment is received, EBPITD / SDE NET PROFIT
Earnings Before Proprietors
you will no doubt or expenses incurred. Income, Interest, Tax and Total revenues minus
come across plenty BARRIERS TO ENTRY Depreciation / Seller’s total expenses.
of business jargon The degree of difficulty Discretionary Earnings EQUITY
competitors face when
during the process entering a specific market, EPP Owned assets minus
of selling. This guide based on high initial invest- Employment Protection liabilities.
Provision. A clause in
explains some of the ment requirements, patents, Employment Agreements NPAT
trademarks and specialist
common terms you’ll technical knowledge stipulating how their Net profit after tax.
encounter. needed etc. employment will be handled RETAINED EARNINGS
if the business is sold.
COST OF GOODS Profits kept in the business
Direct costs incurred in GROSS PROFIT and not paid to owners or
manufacturing a product or Revenue generated by shareholders.
providing a service (usually the business minus the cost RETURN ON
materials and labour). of sales. INVESTMENT (ROI)
INFORMATION An indicator of profitability
COST OF SALES MEMORANDUM shown as a percentage,
Includes the expenses calculated by dividing net
involved in marketing, selling A document providing profit by equity, and then
and delivering the product a detailed overview of multiplying by 100.
or service, plus the cost a business.
of goods. INTANGIBLE ASSETS SWOT
DUE DILIGENCE Non-physical assets such as An analysis of the Strengths,
A period of 5 to 15 working a customer/client list, supplier Weaknesses, Opportunities
and Threats associated with
days (sometimes longer) relationships, intellectual the business.
where a buyer can verify property (IP), patents,
information supplied in the trademarks, brand name(s)
Information Memorandum and goodwill.
and review material or IP
documents not previously Intellectual property –
supplied due to commercial intangible business
sensitivity.
value that’s the result of
The tools to sell smarter copyrights, etc.
creativity, such as patents,

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