There are many terms used by business brokers in the marketing of a business for sale. Here are some of the basic terms that all must understand if you are considering the sale of your business or looking for a business to purchase:
Balance sheet
The balance sheet is the statement of the net worth of the physical or tangible assets of a business and an indication of the value a business owner is likely to receive if he / she decides to liquidate the business rather than sell the business.
Business market value
The combined value of all of the physical assets of a business, as reflected on the balance sheet, plus the worth of the business as an ongoing entity, based on its recent past performance attracting and retaining customers and experiencing financial success.
Goodwill
The difference between the liquidation value and the going concern value of a business, reflecting the amount a buyer is willing to pay for the intangible assets of a business, including the business name, clients, operations and systems, and marketplace advantage.
Liquidation
Ending a business by selling its physical or tangible assets to pay off creditors, with remaining proceeds distributed to the business owner and with no compensation received for the value of non – tangible assets such as business goodwill.
Seller financing
A sale payment method that allows the buyer to pay the business owner a portion of the selling price when the sale closes, and to pay the remainder of the price, plus interest, over a period of time specified by a loan arrangement between the business owner and buyer, usually backed by security and other arrangements.