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Academy/ Buying & Selling a Business/Glossary

Glossary for Buying & Selling a Business.

Plain-language definitions of the terms you will meet.

Accredited investor: who actually qualifies — Treadstone Academy

Add-back — Treadstone Academy

Adjusted cost base — Treadstone Academy

Adjusted EBITDA vs. reported EBITDA — Treadstone Academy

Alternative minimum tax — Treadstone Academy

Amalgamation: combining two corporations into one — Treadstone Academy

Articles of incorporation: what the share structure actually authorizes — Treadstone Academy

Asset-based lending: sizing a borrowing base — Treadstone Academy

Asset purchase agreement: what stays behind — Treadstone Academy

Assignment clause: which of a target’s contracts cannot move without consent — Treadstone Academy

Bolt-on acquisition: folded into an existing platform — Treadstone Academy

Break fee: when a failed deal has a price — Treadstone Academy

Bridge financing: closing before permanent debt lands — Treadstone Academy

Bulk sales legislation: does it still apply to a Canadian asset deal? — Treadstone Academy

Business Development Bank of Canada — Treadstone Academy

Canada Small Business Financing Programme — Treadstone Academy

Capital call: funding a commitment in pieces — Treadstone Academy

Capital commitment: the pledge behind the calls — Treadstone Academy

Capital dividend account — Treadstone Academy

Capitalisation rate: turning earnings into value — Treadstone Academy

Carried interest: how a GP’s share is taxed — Treadstone Academy

Cash-flow lending: underwriting the target’s earnings — Treadstone Academy

Cash-free debt-free basis: what the price assumes — Treadstone Academy

Change of control clause: the provision an assignment clause can’t reach — Treadstone Academy

Chartered Business Valuator: what CBV certifies — Treadstone Academy

Clawback Provision: When a Manager Repays Carry — Treadstone Academy

Co-Investment Right: What an LP Actually Gets — Treadstone Academy

Comparable company analysis: limits for private firms — Treadstone Academy

Completion accounts: how the final price gets set — Treadstone Academy

Condition precedent: closing a purchase agreement — Treadstone Academy

The CIM: what it discloses, and when a buyer sees it — Treadstone Academy

Continuance under the CBCA: switching statutes — Treadstone Academy

Continuation Fund: Why a Manager Moves an Asset — Treadstone Academy

Control premium: what a buyer is really paying for — Treadstone Academy

Corporate minute book: what a gap in it actually delays at closing — Treadstone Academy

Corporate purification — Treadstone Academy

Crystallisation — Treadstone Academy

Debt service coverage ratio (DSCR) — Treadstone Academy

Deemed dividend — Treadstone Academy

Definitive agreement: what makes a deal binding — Treadstone Academy

Discharge of a security interest: clearing a target’s registry before closing — Treadstone Academy

Disclosure schedule: what it actually protects — Treadstone Academy

Discount for lack of marketability, explained — Treadstone Academy

Discounted cash flow (DCF): when it's worth building — Treadstone Academy

Dissent right: what it lets an outvoted shareholder do — Treadstone Academy

Distribution Waterfall: Deal-by-Deal vs Whole-Fund — Treadstone Academy

Distributions to paid-in capital (DPI): the metric that only counts cash back — Treadstone Academy

Dividend recapitalisation: what it is, when used — Treadstone Academy

Drag-along right: how a majority forces a clean 100% sale — Treadstone Academy

Dry Powder: Why Uncalled Capital Pressures Pricing — Treadstone Academy

Earn-out: paying more only if the target performs — Treadstone Academy

EBITDA: what it measures when a business changes hands — Treadstone Academy

EBITDA bridge: how a target's earnings get priced — Treadstone Academy

Enterprise value: what it prices before cash and debt — Treadstone Academy

Equity value: derived from enterprise value at closing — Treadstone Academy

Escrow account: who holds the money after closing — Treadstone Academy

Estate freeze — Treadstone Academy

Exclusivity period: how long should a seller grant? — Treadstone Academy

Exempt market dealer: what the registration covers — Treadstone Academy

Fair market value: how the ITA tests a related price — Treadstone Academy

A director's fiduciary duty: whose interest it protects — Treadstone Academy

Financial covenant: what a loan requires you to maintain — Treadstone Academy

Free cash flow to owner: what SDE approximates — Treadstone Academy

General Partner: Who Actually Runs a PE Fund — Treadstone Academy

General security agreement (GSA) — Treadstone Academy

GP Catch-Up: How the Waterfall's Tier Works — Treadstone Academy

Holdback: how long it stays back, and why — Treadstone Academy

Holding company: why deal-makers use one — Treadstone Academy

Indemnity basket — Treadstone Academy

Indemnity cap — Treadstone Academy

Independent Sponsor: How a Deal Gets Funded — Treadstone Academy

Indication of interest (IOI): a price, not a deal — Treadstone Academy

Interest deductibility on acquisition debt — Treadstone Academy

Intergenerational transfer rules — Treadstone Academy

Internal rate of return (IRR): why a fast exit can outscore a bigger one — Treadstone Academy

J-curve: why early fund returns look negative — Treadstone Academy

Landlord consent to assignment: why it belongs on week one of the timeline — Treadstone Academy

Letter of intent (LOI): what’s actually binding — Treadstone Academy

Leverage multiple: how much debt against EBITDA — Treadstone Academy

Leveraged buyout: where the debt sits after closing — Treadstone Academy

Lifetime capital gains exemption — Treadstone Academy

Limited Partner: What Rights an LP Actually Holds — Treadstone Academy

LPA: Which Terms Actually Matter to an Investor — Treadstone Academy

Locked-box mechanism: pricing off a fixed date — Treadstone Academy

Maintenance capex: sustaining spend vs. growth spend — Treadstone Academy

Management fee: what it pays for, and when it steps down — Treadstone Academy

Material adverse change clause — Treadstone Academy

Mezzanine debt: priced to sit behind the bank — Treadstone Academy

Minority discount: how large is it in Canada? — Treadstone Academy

Multiple arbitrage: the same earnings, a higher price — Treadstone Academy

Multiple of earnings: why a multiple prices a business — Treadstone Academy

Multiple on invested capital: what MOIC tells you — Treadstone Academy

Net benefit review — Treadstone Academy

Net working capital peg: what sets the price — Treadstone Academy

No-shop covenant: what it stops a seller doing — Treadstone Academy

Non-competition covenant — Treadstone Academy

Non-disclosure agreement: before the data room opens — Treadstone Academy

Non-solicitation covenant — Treadstone Academy

Normalisation adjustment: restating owner earnings — Treadstone Academy

Offering memorandum exemption: what it permits — Treadstone Academy

Oppression remedy: when expectations get defeated — Treadstone Academy

Paid-up capital — Treadstone Academy

Personal guarantee: when a lender still asks for one — Treadstone Academy

Plan of arrangement: the CBCA squeeze-out route — Treadstone Academy

Platform investment: the base a roll-up is built on — Treadstone Academy

PPSA registration search: reading what a target’s registry file actually shows — Treadstone Academy

Pre-emptive right, and when it actually applies — Treadstone Academy

Pre-merger notification — Treadstone Academy

Precedent transaction analysis in Canada: the data gap — Treadstone Academy

Preferred return: the hurdle before carry is paid — Treadstone Academy

Private issuer exemption: who actually qualifies — Treadstone Academy

Pro forma financial statements: what a lender wants — Treadstone Academy

Purchase price allocation: splitting land, goodwill & CCA — Treadstone Academy

Purchase price true-up: when money moves after closing — Treadstone Academy

Qualified small business corporation share — Treadstone Academy

Quality of earnings report: what it actually tests — Treadstone Academy

Recapture of capital cost allowance — Treadstone Academy

Retiring allowance — Treadstone Academy

Right of first offer vs a right of first refusal — Treadstone Academy

Right of first refusal: why it slows a share sale — Treadstone Academy

Rollover equity: why sellers keep a stake in NewCo — Treadstone Academy

Run-rate revenue: annualizing a strong month — Treadstone Academy

Safe income on hand — Treadstone Academy

SISP: the court-approved sale process in a CCAA filing — Treadstone Academy

Search fund — Treadstone Academy

Secondary sale: exiting a fund interest early — Treadstone Academy

Section 116 clearance certificate — Treadstone Academy

Section 167 GST/HST election — Treadstone Academy

Section 22 election — Treadstone Academy

Section 84.1 — Treadstone Academy

Section 85 rollover: deferring tax on a share swap — Treadstone Academy

Seller’s discretionary earnings (SDE) in Canadian deals — Treadstone Academy

Senior secured term loan: first claim on the assets — Treadstone Academy

Share purchase agreement: what the buyer inherits — Treadstone Academy

Shotgun clause: how it forces an honest price — Treadstone Academy

Stalking horse bid: the floor price in a court sale — Treadstone Academy

Subordination agreement: who gets paid first — Treadstone Academy

Survival period — Treadstone Academy

Tag-along right: the protection a minority holder gets — Treadstone Academy

Teaser document: what it says before a name gets attached — Treadstone Academy

Terminal loss — Treadstone Academy

Terminal value: the majority of a DCF, not a footnote — Treadstone Academy

Total value to paid-in capital: TVPI explained — Treadstone Academy

Trailing twelve months (TTM): pricing on now — Treadstone Academy

Unanimous shareholder agreement: what it removes — Treadstone Academy

Unitranche facility: one loan instead of two — Treadstone Academy

Vendor take-back note: the seller finances its own sale — Treadstone Academy

Virtual data room: how it's organized, and who sees what — Treadstone Academy

Warranty and indemnity insurance — Treadstone Academy

WACC: what it does to the price a fund can pay — Treadstone Academy

The Canadian benchmark

What do businesses like this one actually sell for?

Canadian small-business transaction data is not published anywhere, so most valuations in this country quote an American benchmark. The Deavo–Treadstone Acquisition Index is a daily record of Canadian listings built to replace that: asking-price distributions by province and city are published now, and days on market, departure rates and asking-to-sale spreads follow as the series lengthens. Leave an email and we will tell you as each measure lands.

No pitch, no listings. One email as each measure is published.