Asking Price
The total amount for which a business or an ownership interest is offered for sale.

Asset Sale
This term has two definitions. The proper definition depends on its usage:
  1. The means by which a business owner transfers ownership of tangible and intangible assets to another owner without transferring the ownership structure.
  2. The sale of a business enterprise at a price based solely upon the value of the tangible assets.

Blue-Sky
That portion of a requested price that cannot be supported through the application of established valuation methodology and which generates no economic benefit.

Business Broker
A Business Broker is an intermediary dedicated to serving clients and customers who desire to sell or acquire businesses. A business broker is committed to providing professional services in a knowledgeable, ethical and timely fashion. Typically, a Business Broker provides information and business advice to sellers and buyers, maintains communications between the parties and coordinates the negotiations and closing processes to complete desired transactions.

Cash Flow
All cash (and cash equivalent) that flows to the benefit of the Owner including the net profit declared on tax returns.

Client
An entity with which a Business Broker has a fiduciary relationship.

Co-Brokerage
An agreement between two or more Business Brokers for sharing services, responsibility and compensation on behalf of a client.

Co-Business Broker
A Business Broker who shares services, responsibility, and compensation on behalf of a client.

Cooperating Business Brokers
Business Brokers who share their knowledge, expertise, and skills for the benefit of the business brokerage profession, clients, customers and the public good.

Customer
An entity to a transaction that receives services and benefits, but has no fiduciary relationship with the Business Broker.

Discretionary Earnings
The earnings of a business enterprise prior to the following items:
  • Income taxes
  • Non-operating income and expenses
  • Nonrecurring income and expenses
  • Depreciation and amortization
  • Interest expense or income
  • Owner’s total compensation for those services, which could be provided by a sole owner/manager.

Finders Fee
An amount paid to another party for locating and referring a client or customer (illegal in Hawaii).

Joint Venture
(A ‘coined’ expression) that refers to (not a Franchisor & Franchisee) but a Joint Venturor and Joint Venturee that operate a Limited Liability Company, with the primary Members being Independent Contractors, together with a Non-Compete and Non-Disclosure Agreement. This entity will primarily be operated under a continually updated (SOP) Standard Operations Manual.

Non-operating/Noncontributing Asset
An asset unnecessary to the operation of a business enterprise and the generation of its revenues.

Owner
A generic term used in business brokerage to represent the proprietor, general partner or controlling shareholder (singular or plural as appropriate) of a business enterprise.

Owner’s Salary
The salary or wages paid to the owner, including related payroll burden.

Owner’s Total Compensation
Total of an owner’s salary and perquisites, after the compensation of all other owners has been adjusted to market value.

Perquisites
Expenses incurred at the discretion of the owner, which are unnecessary to the continued operation of the business.

Referring Business Broker
A Business Broker who provides introductory information, which leads to a client relationship.

Transaction Value
The total of all consideration passed at any time between the Buyer and Seller for an ownership interest in a business enterprise and may include, but not limited to, all remuneration for tangible and intangible assets such as furniture, equipment, supplies, inventory, working capital, non-competition agreements, employment and/or consultation agreements, licenses, customer lists, franchise fees, assumed liabilities, stock options, stock or stock redemptions, real estate, leases, royalties, earn-outs and future considerations.