Glossary

An expense in the books that a new owner wouldn’t have, added back to profit: a one-time legal bill, or owner pay above what a hired manager would cost. Only documented add-backs are credited.

EBITDA after the add-backs and adjustments a buyer accepts. The basis most buyers who won’t run the business themselves price from.

A number worked out from your other answers, labelled as such, and counted at half weight until you confirm it.

Where your operating numbers sit inside the typical range for your kind of business, weighted by how much each matters. 50 is the median. It is a diagnosis and never feeds the value.

The single value the report stands behind: the probability-weighted average of the scenarios. $3.93M for the sample.

The yearly return an investor asks for to wait for the business’s future cash and take its risks. It turns future cash into today’s dollars: higher rate, lower value. 15.4% for the sample.

A big number broken down into the everyday measures a team can move, each with an owner, a cadence and a source.

Earnings before interest, taxes, depreciation and amortization: what the business makes from its operations each year before financing and accounting write-offs.

One cut of the same run for one reader: full, core, plan (for the team, without the price), board, and appendix.

What the whole business is worth before you account for its cash and debts.

What the owner’s share is worth: enterprise value plus spare cash, minus debt and debt-like items. The headline value is an equity value.

The standard chart for a valuation: one horizontal bar per method, from its low to its high answer, with a line at the concluded value.

Cash the business generates after paying to keep itself running: taxes, equipment and working capital.

A regulatory or contractual condition that, if it failed, would change the value sharply, such as a listing a phone company must hold to carry calls. Gates are priced as scenarios.

The share of each sales dollar left after the direct cost of delivering the service.

Research on one industry code: how its businesses make money, what normal looks like, and which numbers move value. It writes the questions and sets the typical ranges.

The typical value for businesses of your type. Used for any question you skip, and labelled so you know.

What you would take home from a sale after taxes, fees and debts, which depends on how the deal is structured.

EBITDA restated as a new owner would see it: owner pay reset to market, one-time items removed. $530k for the sample.

Sales, marketing and administration costs, often shown as a share of revenue.

The share of the valuation’s weight resting on your own numbers rather than on industry averages, shown as a ring in the studio.

Where a number came from: your answer, a document, the statements, an inference, or the industry median. Every input carries its label.

The low and high ends the value could reasonably sit between, from the scenarios and the uncertainty in the inputs. $3.48M–$4.31M for the sample.

Running the same engine again a year later on new numbers, so the change in value can be split into what you did and what moved around you.

One possible state of the world (the base case, losing a big customer, a cost shock, a regulatory gate failing), each valued in full and weighted by its odds.

Profit plus everything the owner takes out, before any manager’s salary. How small owner-run businesses are usually priced.

One billed user or phone line on a business phone service. Buyers often price these books per seat.

The line at the foot of every report page: engine version, policy version, a fingerprint of the inputs, the research date and the plan version. Same stamps, same report.

The most recent twelve months of results, whatever the calendar. Buyers pay for results that have shown up here.

The middle half of comparable businesses for one number: from the low quartile to the high quartile.

The written, versioned rules the engine applies to every judgment, such as how the discount rate is built. Changing a rule changes the version.

The standard chart for change between two values: a starting bar, one step up or down for each cause, and an ending bar.

Money tied up in running the business day to day: what customers owe you less what you owe suppliers.