Acronyms and abbreviations are very common things in the business world and Amazon isn’t an excuse. Through your time as an Amazon seller you have encountered many of them and probably used quite a few.
However, you have decided to sell your Amazon FBA business and now there are even more unknown words that are added to the list.
Don’t fret, we have compiled a comprehensive guide on every term you may encounter on your journey so you glide as easily as possible throughout the entire sale process.
Add backs are business expenses on the financial statements will be removed once the handover process is complete and the business switches hands.
This can take the form of salaries paid to non-working staff, such as an ex-owner’s family members, or a loan interest that is the ex-owner’s responsibility.
A person or firm that acts as an intermediary – helping buyers and sellers through the transaction process for a fee.
An earnout is a financial arrangement where a buyer pays a certain portion of the purchase price of a business – and once in ownership, pays off the remaining amount for a predetermined number of months or years.
This is usually done to speed up the selling process, and can greatly benefit a seller if the earnout clause requires certain performance benchmarks or interest payments as part of the deal.
An LOI is a document that states the primary commitments between one business party and another, such as the major terms of a deal. Commonly used in all important business transactions.
A legal agreement or clause within a contract that forbids an employee from working with the employer’s competitors for a certain period, both during and after the employment period.
Generally, it also legally bars an employee from sharing inside information with a competing company or other entities.
A basic metric used to determine the value of small businesses – generally those with annual sales under $1,000,000. SDE is calculated with the following formula:
SDE = Net income (or net loss) on the company tax return + interest expense + depreciation expense + amortization expense + the current owner’s salary + owner perks.