Glossary
Acquisition terms, explained
Plain-English definitions of the terms you'll encounter buying a business in New York — what each one means, when it matters, and the New York-specific note where applicable. Not exhaustive legal or financial definitions; confirm specifics with your attorney, CPA, or lender.
Seller's Discretionary Earnings
The total cash benefit to the owner of a small business — used as the valuation basis for owner-operated businesses under ~$1M in earnings.
Read definitionEarnings Before Interest, Taxes, Depreciation, and Amortization
A normalized earnings measure used for larger, manager-run businesses — typically above ~$1M in earnings.
Read definitionDebt-Service Coverage Ratio
The ratio of business cash flow to annual debt service. SBA 7(a) lenders typically require 1.15–1.25 for acquisition loans.
Read definitionLetter of Intent
A non-binding agreement that sets the purchase price, structure, and diligence timeline before the formal purchase agreement.
Read definitionNon-Disclosure Agreement
A confidentiality agreement signed before a seller will release financials or business identity to a potential buyer.
Read definitionQuality of Earnings
A CPA-led reconstruction of a business's real cash flow — separate from the tax return or broker-prepared P&L.
Read definitionAdd-back
An expense the seller ran through the business that's added back to net profit to reflect true cash flow available to a new owner.
Read definitionWorking capital
Current assets minus current liabilities — the cash a business needs to fund daily operations.
Read definitionGoodwill
The intangible value of a business above the fair market value of its tangible assets — brand, customer base, trained workforce.
Read definitionBulk-sale notice (NYS)
The NYS process that protects a buyer from the seller's unpaid sales tax liability on a business acquisition.
Read definitionMore terms coming
This glossary is being expanded to cover UCC-1, Certificate of Authority, NYS 100, DTF-17, FDD, successor liability, asset purchase vs. entity purchase, escrow, earnout, seller financing, SBA 7(a), SBA 504, SBSS, Prime rate, amortization, capex, FF&E, PIP, RevPAR, ADR, comp set, NAICS, SOC code, QCEW, OEWS, CBP, and more. If you're evaluating a term not yet listed, a free call with Jason can give you the context you need.
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Need a term explained in context of your specific deal?
A free 20-minute call with Jason can walk through any acquisition term — and how it applies to the specific business you're evaluating.
- You're choosing between two or three target industries and want a reality check on each.
- You've found a listing and want a second set of eyes on the financials before you spend on a CPA.
- You're an out-of-state buyer who needs a New York-specific view of taxes, licensing, and deal norms.
- You're stalled on how to source off-market opportunities in your target region.