Deal Flow – A stream of potential business acquisitions moving across your desk in a quantity that allows you to select the few that meet your criteria.
Deal Structure – The combination of types of payment by which the purchase of a business is accomplished. It can include cash, notes, stock, consulting agreements, earnout provisions, and covenants not to compete. The sale can take the form of an asset sale or a stock sale.
Definitive Agreement – A document that settles or describes the terms of a business transfer in a final and conclusive form.
Depreciation – The amount that tangible assets decreased over the normal life cycle as designated by the parameters of the IRS.
Discounted Cash Flow – A valuation technique that assigns a value in today’s dollars to the cash flows that are expected to occur in the future.
Discount Rate – A rate of return used to calculate the present value of a stream of payments.
Discretionary Earnings – Earnings of a business enterprise prior to these expenses: income taxes, non-operating income & expenses, non-recurring income & expenses, depreciation & amortization, interest expense or income, and a single owner’s total compensation and benefits. Sometimes called Owners Discretionary Cash Flow (ODCF).
Due Diligence – The investigation of the other party’s business practices in an attempt to verify all information provided or uncover previously unknown information.