American Stock Exchange

American Stock Exchange

The American Stock Exchange (AMEX) is the third-largest stock exchange by trading volume in the United States. AMEX was acquired by the New York Stock Exchange (NYSE) Euronext in 2008, at which time its name was changed to NYSE Alternext US. In 2009 it became the NYSE...
Seller Note

Seller Note

A seller’s note receivable is an alternative form of business capital.  This type of debt financing is often used in small business acquisitions, where the seller agrees to accept a portion of the purchase price in a series of deferred payments. This occurs when the...
Amortization of Goodwill

Amortization of Goodwill

Goodwill is defined as an intangible asset that is created as the result of an acquisition of one company by another, at a premium price over its fair market value. The willingness of a buyer to pay a premium for a given business may be due to value built up over time...
FF&E

FF&E

Furniture, fixtures, and equipment (or FF&E) is an accounting term used in the process of valuing, liquidating, or selling a company or building. FF&E refers to any fixture, piece of furniture, or piece of equipment that is moveable and is not permanently...
Enterprise Value

Enterprise Value

Enterprise Value, also sometimes called “EV,” is a measure of a company’s total business value. EV is the theoretical price for a company if it were to be bought, and because EV accounts for a company’s debt and cash, it is considered a more accurate representation of...
Data Room

Data Room

A Data room may be a physical room or a virtual room and are used for a number of reasons – including data storage, document exchanges, financial transactions, file sharing, and legal transactions. Often, data rooms are used for the sale of a business or when raising...
Lifestyle Business

Lifestyle Business

A lifestyle business is created and run by its founder to serve the purpose of sustaining a particular level of income, and no more. Often founded by an individual, lifestyle businesses creates a foundation for enjoying a particular lifestyle, bringing in just enough...
Escrow Agent in the Sale of a Business

Escrow Agent in the Sale of a Business

When a business is about to be sold, the parties to the sale may find it beneficial to establish an escrow agent to handle the transfer of certain assets and cash between the buyer and seller. Many times the parties agree to use the escrow account held by one of the party’s business attorneys. However, in many cases the parties prefer to hire an independent escrow agent to handle the assets and cash that will change hands.

Mezzanine Debt Definition

Mezzanine Debt Definition

In its purest form, Mezzanine Debt is a business debt instrument that carries along with it certain rights to convert debt into equity (stock, common shares, partnership interests, LLC membership units, etc.). Mezzanine debt financing is not a pure debt or a pure equity instrument. It is something in the middle. In fact, the word ‘mezzanine’ is derived from the Italian word ‘mezzano’, meaning middle, and is used to describe how this particular form of business capital combines elements of both debt and equity financing into one instrument.

Lehman Formula Definition

Business Brokers and M&A Intermediaries may use or reference the ‘Lehman Scale’ when discussing their compensation method with a business owner contemplating the sale of their business. The Lehman Scale was originally developed in the late 1960’s and used by the Lehman Brothers when raising business capital for their clients.

DBA vs. LLC

When the entrepreneur decides it is time to start a new business, they often explore all of the various business structures available and discover there is much confusion related to the various options. One of the most common questions we are asked as advisors to...

How to Calculate Debt Service Coverage Ratio [Tool]

Debt Service Coverage Ratio compliance often is required or necessitated by covenants in a bank loan agreement. A bank loan covenant regarding the debt service coverage ratio will specify the amount of income a business and/or its guarantor must generate relative to the debt principal and interest payments on an annual basis to remain in compliance with the covenant. The business owner, or his or her CFO or Controller, should monitor this ratio carefully on a monthly basis so the covenant is not unintentionally broken.

What is a Debt Service Coverage Ratio?

The debt service coverage ratio is a measurement used by lenders to determine if a business is able to meet its debt servicing obligations through its operating income during a given period of time. In most cases, a lender wants the operating income to exceed the debt servicing costs by some measure. This ratio defines the extent to which a business’s operating income (or other defined measure of cash flow) exceeds the cost to service its bank loans.

Non-Solicitation Agreement | How to Keep Your Best Employees

If you’ve grown a valuable business, there is no doubt your employees are a big part of your success. You also know that hiring, training, and managing a great team of productive employees is a difficult task. And keeping your best employees is yet another accomplishment! But the painful truth is your competition would be very pleased to hire away your best employees.

Contract Provisions Checklist

Entering into a new contract is an exciting time for any company. The agreement is signed with the hope that it will grow the business and result in a long, mutually beneficial relationship with the other side. While such optimism is warranted, the importance of entering into a legally sound contract is critical to the protection of your business.

Do You Need a Design Patent?

In the recent Apple-Samsung case, the jury found that Samsung infringed six of Apple’s patents. While we think of Apple as having such technological superiority, three of the patents that Samsung were found to infringe were design patents. Unlike utility patents which cover any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof; design patents cover any new, original, and ornamental design for an article of manufacture.

What Is A Patent & What Are Patent Requirements?

A patent is a governmentally granted monopoly that gives an inventor the exclusive right to make, use, or sell their invention for a limited time, in exchange for disclosure of that invention. There are three types of patents: design patents, plant patents, and utility patents. Generally utility patents are being referenced when you hear the word ‘patent’ and these will be the focus of the rest of this article.

The Importance of a Buy-Sell Agreement

For every entrepreneur, a smooth transition of business ownership will be of importance at some future point. The Buy Sell Agreement deals with a specific exit strategy case. An agreement by and between business owners, it establishes a mechanism for the purchase of ownership interests following the departure of an owner due to a triggering event (i.e., death, divorce, disability, retirement, etc.).

Defining the Indemnification Basket: Deductible Baskets & Tipping Baskets

The “indemnification basket” is one of the most important deal terms found in the Letter of Intent and ultimately in the Purchase Agreement and is often misunderstood by both the buyer and seller of a business. Buyers want the basket to be as low as possible and Sellers want it to be as high as possible. Baskets may be one of two types: a deductible basket or a tipping basket.

Entrepreneur’s Confidentiality Agreements: What You Should Know

A typical entrepreneur invests a tremendous amount of time, effort and money in building a business. That is why it is so important for entrepreneurs to make sure employees and third parties who work with the business are prohibited from improperly using or disclosing any confidential or proprietary information of the business(e.g. customer lists, trade secrets and financial statements). Similarly, and in connection with the opportunity to sell a business, it is critical for the owner of the business not to provide any confidential information to a prospective purchaser until that party has signed a well-written confidentiality agreement.

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