Explanation of Business Terms that are Used to Sell a Business

Sell a Business

Introduction : 

You may need to familiarize yourself with some of the new terminology you may encounter if you are just beginning the process of sell a business. Learning the meaning of some of them will be quite beneficial, as they are extremely important. 

In the world of sales, there are a variety of terminology that are used and even experts use words incorrectly. It may appear to be a simple task, but knowing every sales word is essential for efficient communication within your sales department.

For this reason, we have created a dictionary of the terminology that is most frequently used during mergers and acquisitions.

Common sales terms : 

1. Acquisitions – 

An agreement in which a buyer (usually a private equity or investment firm) buy a business assets, shares, or goodwill of a trading company.

2. Asset Purchase Agreement (APA) –

The terms and conditions for selling and buying assets inside a business are outlined in an asset purchase agreement.

3. Asset Sales –

The buyer acquires specific assets of the firm, such as machinery, stock, and trade names, while the seller keeps the legal identity of the businesses.

4. Balance Sheet Adjustment –

A balance sheet adjustment is necessary when the net assets of a company significantly change between the offer date and the completion of a sale.

8 Essential Skills for Successful Field Sales Representatives

This article examines the eight important abilities that can help prospective sales reps become accomplished, successful professionals.

5. Business Valuation – 

A complete analysis and report that forecasts the amount of money you are likely to get for your business. Businesses and shareholders can plan and set expectations for their business exit with the help of business valuations, which are often based on your past financial performance, future forecast, and experience with similar agreements.

6. Cash Free, Debt Free – 

Cash, Debt Free refers to a transaction in which a buyer buys a business and its assets with the understanding that the seller will settle all outstanding debts and remove any extra cash before the sale completion.

7. Earn-Outs –

An earn-out is a term in a contract that guarantees the seller of a firm more money in the future should the company meet specific financial targets.


Earnings Before Interest Tax Depreciation and Amortisation. This metric comes from the profit and loss statement of a business and is frequently combined with an industry multiple to form the foundation of business valuations.

9. Employee Ownership Trust (EOT) – 

Employees can acquire ownership of a company through the use of an Employee Ownership Trust. The current owners of the company may set it up as an aspect of their exit strategy. It is also possible to establish a new company in which its employees own it.

10. Business to business (B2B) – 

Businesses that sell solutions to entire businesses are referred to as B2B.

11. Business to consumer (B2C) –

Businesses that sell solutions to individual customers are referred to as B2C.

12. Joint Venture –

In a joint venture, two or more companies combine their resources and knowledge to accomplish a common objective. The benefits and risks of the enterprise are also shared.

13. Legal Due Diligence –

An acquisition or merger requires careful legal due diligence. Leases, contracts, intellectual property, and other legal documents are all part of the process of gathering and evaluating legal information about the business.

14. Mergers – 

An agreement between two businesses that have a shared strategic interest. Shares of one business are exchanged for shares of the other. There is frequently minimal to no financial exchange if the companies are similar in size.

15. Private Equity Firm – 

An investment firm that seeks funding from individual investors or investment funds to build up a portfolio of businesses that it plans to eventually sell for a significantly greater price.

16. Stock Exchanges – 

Stock exchanges are venues for the buying and selling of stock shares. Businesses consent to having their stock listed for trading on the stock exchanges of their choice. The stock may be traded by participants in each exchange.

17. Company Share Sale –

A deal in which the shareholders and/or business owners sell all or part of their firm shares.

18. Confidentiality Agreement –

This can be referred to as an NDA, or non-disclosure agreement. The buyer is required under this agreement to maintain the confidentiality of any disclosed information. This contract has legal force behind it.

19. Deferred payment –

A financing arrangement known as deferred payments allows the seller to accept fixed payments from the buyer over a certain length of time. These payments are not based on how well the business performs after the completion of a sale.

20. Financial Due Diligence –

Financial due diligence is a comprehensive investigation of the financial performance of a business. 

Final Thought : 

You will be more ready when the time comes for you to buy a business if you have a greater understanding of some of these essential terms. Examine our current business listings to discover some interesting business options.

Read More:

Everything You Need to Know about PTE Core Mock Tests

Previous article

From Application to Admission: How Education Consultants in Australia Make a Difference

Next article

You may also like

More in Business