Business Broker Acronyms Used For Selling Businesses

What does it mean?

 

Trying to understand all the lingo when you first start to look for a business to buy is already difficult enough but it gets even worse when business brokers include the use of acronyms in their business for sale advertisements.

Fortunately, we’ve compiled a list of the 12 most common ones you will see and even took the time to write a definition to tell you what it means –

  1. WIWO – This stands for “Walk in Walk Out” which essentially means you buy the business ‘as is’ and there is no handover or training period provided by the owner
  2. SAV – Stock at valuation or stock at value so when a business is advertised as ‘$100,000 + SAV’, it means that it is $100,000 plus stock at value
  3. ROI – Return on Investment, generally calculated in years using business purchase price vs annual profit
  4. EBIT – Earnings Before Interest Tax, so this is the businesses earnings before interest and tax is calculated
  5. PEBIT –Proprietors earnings before interest & tax so this is the owners earnings before interest and tax is taken
  6. EBITDA – Earnings Before Interest Tax Depreciation Amortisation – This means earnings before interest, tax, depreciation and amortization is calculated
  7. P&E – Plant & Equipment, the plant and equipment of a business
  8. CPI – Consumer Price Index, calculated by the Australian Bureau of Statistics and is regularly used as a means to calculated year rental increases on commercial properties
  9. POA – Price on Appointment, means price for a business won’t be disclosed until after the buyer has met the broker or proven that he is qualified
  10. EOI – Expression of Interest, business brokers usually use expressions of interest as a bidding process to segment out buyers and obtain informal offers so the seller can assess whether the buyers are worth pursuing
  11. PA – Per Annum, usually referring to the financial year
  12. DD – Due Diligence, the process of assessing a business before deciding whether to proceed with the purchase and is usually done prior to signing the sales contract