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Glossary of terms used on this site

There are 73 entries in this glossary.
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Term Definition
Valuation Formula

IBT is income before tax. AV is agreed value. NBT is net business debt, the cash owning at a point in time after any insurance proceeds are accounted for. 'Multiple' is a number from one to five that when used to multiply income before tax will give a business value. The multiple is derived after factors of business size, tenure, contractual status, history and management stability is applied.

E.g. [IBT * Multiple] - Nett Business Debt (NBD) = BSA agreed value (AV)

Variable costs

The costs additional to fixed costs of running a business that can vary depending on the level of demand and business activity.

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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.