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Common Terms Used When Buying and Selling Companies

What Does That Mean?

 

There are a lot of terms and phrases used by professionals buying and selling companies that can be confusing to outsiders. This post provides a glossary of some of the terms you will come across most often:

Share Sale: when a buyer purchases the shares of a limited company.

Asset Sale:  when a buyer purchases the assets (fixed assets, goodwill, employees and working capital) of a limited company, partnership or sole trader.

MBO: or Management Buy-Out is when the management of a company buys it from the existing owners.

MBI: or Management Buy-In is when an out-side management team buys a company from the existing owners.

BIMBO:  Yes really.  When a mixed internal and out-side management team buys a company from the existing owners.

LBO: or Leveraged Buy-Out is when a company is bought with a high ratio of borrowed money to share capital.

Flotation:  exit by the sale of a company’s shares on a stock exchange.

Merger:  a legal process whereby two companies are combined without exchange of payment.

Joint Venture: A special type of merger where two (usually big) companies pool their operations in a sector into a new jointly owned company.

We will add to this glossary as new terms come to mind or are suggested to me.

 

If you are interested in finding out more about these and other issues relating to the sale of a private company one of our business sale experts would be delighted to talk to you in complete confidentiality. Click CONTACT ME to book an initial phone conversation or call us on 01604 432964.

 
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