Acquisition

The purchase by an individual, partnership or company of any of either the goodwill, assets or shares of another company.

Assets

The tangible and intangible property of the company. See below.

Book Value (or Net Book Value or Net Asset Value)

The value of a company's assets and liabilities, as recorded in the Balance Sheet.

Broker

The Business Broker (Business Transfer Agent) acts as a trusted adviser, providing a discreet and confidential service to a business owner(s) to sell that business.

Buyer (Purchaser)

The company, partnership or individual who purchases the shares or assets of another company or business.

Capital Gain

The profit from the sale of a business or of capital assets. The financial consideration received less the cost of ownership.

Company Sale

The sale of the shares of corporate entity (the limited company), as opposed to the sale of the Goodwill and Assets (see below).

Completion

The point at which a transaction is regarded as legally completed, with change of ownership and the transfer of funds.

Covenants

Undertakings given by one party to another. For example, it is usual for the vendor to agree not to set up in competition (often defined in terms of time and geography).

Deferred Payment

A proportion of the total consideration that is held back for an agreed period of time.

Disclosure Letter

A document prepared by the vendor prior to completion which discloses particular situations which qualify the Warranties (see

below) given.

Disposal

The sale by an individual, partnership or company of any of either the goodwill, assets or shares of their company.

Due Diligence

A thorough examination by the buyer and his legal and financial advisers, to ensure that the information provided by the vendor is true and accurate, and that the vendor has fulfilled all of his legal obligations.

Earn-out

A form of deferred payment in which the payment is dependent upon certain criteria, for example future sales and/or profits, being met.

Entrepreneurs' Relief

Entrepreneurs' Relief has replaced Taper Relief as a way of reducing Capital Gains Tax on certain business sales and disposals. The effect of the relief is to reduce to 10% the tax on the first £1m of lifetime capital gains.

Exclusivity

A period of time, typically 60 or 90 days, during which the vendor (and his agent) agree not to enter into discussions or provide information to other prospective buyers. This period is granted to allow the buyer and his advisers to carry out Due Diligence and/or to raise finance.

Goodwill

An intangible asset representing the value of, e.g. the company's client base, its history, reputation and potential future earnings.

Goodwill & Asset Sale

The sale of the Tangible and Intangible Assets of a business. In contrast to a Share Sale, the buyer does not take on responsibility for any of the company's liabilities (other than staff under TUPE). The tax implications are also different.

Heads of Agreement

A non-binding written agreement reached by the seller and buyer. It provides the basis for further discussion and the drawing up of a legally secure Sale/Purchase Agreement.

Intangible Assets

Assets that cannot be physically touched, for example Goodwill, Domain Names and Intellectual Property (Patents, Copyright, Trade Marks).

Loan Notes

Notes given to the vendor as part payment. Often unsecured or secured by a second lien or charge on the assets of the company.

Management Buy In (MBI)

The purchase of a company by an external team of managers.

Management Buy Out (MBO)

The purchase of a company by part or all of the existing staff or management.

Sale & Purchase Agreement

The contract of sale known as the SPA.  A legally binding agreement for the sale and purchase of the shares or assets of a business.

Share Sale

The sale of the entire legal entity and all issued share capital.

Tangible Assets

The physical assets of the business, which may include Property, Plant, Equipment, Furniture, Stock and Vehicles.

Taper Relief

A reduction in capital gains tax payable on the disposal of assets, related to the qualifying period of ownership of the asset, now replaced by Entrepreneurs' Relief (see above).

Valuation

An estimate of the value of a business. A valuation can only be an informed estimate since, like any other sale, the price achieved is determined by the market.

Vendor

The owner(s) of the business to be sold.

Warranties

Undertaking(s) given by the vendor regarding the truth and accuracy of the information provided.  Usually forming a part of the Sale and Purchase Agreement.