Glossary K-L

Lehman formula: the industry standard commission rate, which is a sliding scale—5-4-3-2-1—percent on each successive million dollar purchase price.

Letter of intent: a preliminary offer to purchase a business, usually non-binding, which if accepted by the seller leads to the drafting of a purchase and sale agreement.

Leverage buyout: a transaction in which a company’s capital stock or its assets are purchased with borrowed money causing the company’s new capital structure to be primarily debt.

Lien: a charge or hold assets usually by a creditor until the indebtedness is satisfied.