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Glossary of terms used on this site

There are 73 entries in this glossary.
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G

Term Definition
Generational Succession

(BSR analysis element) Often a 5 to 10 year pan to identify and accomplish internal and external options for the business to pass on - without loss of earning capacity. These options may include individuals or current competitors. This element can be sensitive in that current family members may be ruled out of senior management roles. Separation of shareholding and management can be written into succession planning documents.

The time frame is important as identified successors may need time to build up equity positions (either by individual purchase or a dedicated reserve within the business). These actions are a result of family and business advisor meetings with the consultant and clients. The succession planning must also provide the capacity to remove a individual successor if the choice made becomes clearly a error.

Existing owners cannot get capital out of a business if it is too expensive for a purchaser. Unless this has been actively planned over previous years, a owner will discover that without a 'buyer' - the business has no value.

Goodwill

The difference between the business' sale price and the value of its tangible assets. Goodwill includes intangible assets such as the business reputation, quality of service, location, business name, established customer base, registered trademarks associated with the business and training delivered during a handover. In broad terms there are two types of goodwill, business and personal. Business goodwill relates to the business itself, whereas personal goodwill relates to an individual of the business.

Gross profit

The excess of net sales over cost of goods sold usually expressed as a percentage.

Guardian

Also known as the Appointor or the Principal. The appointor of a trust has the power to remove and reappoint the trustee. This is the key role in a trust with implications for control of assets in longer and immediate time frames.

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Sean says

We are in business with my parents and brother. Some land had been transferred to my brother and I and we asked Jim to prepare a immediate exit strategy in case one of us had or wanted to withdraw. We sought bank finance to improve the land. Jim was able to do that plus discover a error in how the land was transferred that the bank had missed. Since then my brother has left the state and he is being paid out exactly as we set up; no argument.