Unraveling the Mysterious Lingo used by Business Brokers…

AUTHOR

Bruce Coudrey

It doesn’t matter what industry you work in, there always seems to be that inside language, “the lingo” which is usually spoken in acronyms. I’m often asked (mainly by first time buyers or sellers) to clarify acronyms within our Business Broking industry, which in recent times has prompted me to be mindful not to use acronyms at all. So what are some of the most commonly used industry lingo acronyms Business Brokers consistently use in their day to day advertising? The acronyms…

1. WIWO – means the price advertised is ‘walk in-walk out’
2. SAV - means the price advertised, is the price plus ‘stock at valuation’
3. ROI - means the ‘return on investment’
4. EBIT – means ‘earnings before interest & tax’
5. PEBIT – means ‘proprietors earnings before interest & tax’
6. EBITDA or PEBITDA – is the same as points 4 & 5 above with ‘depreciation & amortisation’ added
7. P&E – often used, which means ‘plant & equipment’
8. WIP – means ‘work in progress’
9. CPI – means ‘consumer price index’
10. POA – means ‘price on appointment’
11. ABN – ‘Australian business number’
12. ACN – ‘Australian company number’
13. GST – ‘goods and services tax’
14. PA – ‘per annum’
15. PW – ‘per week’
16. PM – ‘per month’
17. ATO – ‘Australian tax office’
18. DD – is referred to as ‘due diligence’

The lingo…

1. Encumbered – means there maybe some plant & equipment that has a chattel mortgage or loan hold over it from a financial institute that needs to be dealt with prior to settlement.
2. Unencumbered – means the reverse of the above. The assets are completely owned outright without any encumbrance or hold over them.
3. Working Capital – the liquid funds available in the business owner’s bank account to operate a business, post settlement / purchase.
4. Plus Legal’s – means the additional cost of a solicitor or accountant’s fee.
5. Plus Stamps – means there is ‘Government Stamp Duty’ to consider (note: this varies from state to state)
6. Will Trial – the seller is willing for a buyer to come in and trail the business to access the financial performance of the business (conditions apply)

I hope these basics help you when searching for your next business venture.

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