Glossary E-F

/Glossary E-F
Glossary E-F2018-03-13T10:10:17+00:00


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Earn-outs: a part of the purchase price is dependent on a future performance variable such as profits or sales.
EBIT: the acronym for earnings before interest and taxes.
EBITDA: the acronym for earnings before interest, taxes, depreciation, and amortization, also known as cash flow.
EBITDA-CAP-X: EBITDA minus capital expenditures. A more realistic assessment of earnings that EBITDA.
Encumbrances: a lien against certain property encumbers the company’s assets that could ultimately hold up or prevent the closing.
Enterprise value: market value of equity, plus interest-bearing debt.
Entrepreneur: taken from the German word “unternehmer,” referring to a person who owns and runs his own business.
Escrow: money delivered to a third party that is held in deposit until the grantee fulfils certain conditions.
Fair market value: what assets would most likely sell for in the open, market; this is often determined by a professional appraiser.
Finder’s fee: A commission for merely identifying and introducing a buyer to the seller, but does not include other services such as valuing, structuring, and negotiating.
Floor price: the lowest preconceived price that a seller will accept.
Free cash flow: operating income plus depreciation and amortization (non-cash charges) but subtracts capital expenditures and dividends (that use cash). Free cash flow, in essence, is the amount of cash left over after a year of business as usual.