Phoenix Affiliates



Glossary

Common terminology used in the mergers and acquisitions industry.


  • Affidavit - a sworn statement; written oath such as acknowledgment.
  • Agreement of Sale - a bilateral contract whereby buyer promises to buy and seller promises to sell by execution and delivery of deed; also know as Purchase and Sale Agreement (P&S).  Agreement means the same as Contract.
  • Amortization - act of liquidating an indebtedness by equal and periodic payments usually monthly; this direct reduction method means each payment remains constant but ratio of principal and interest changes with an increasing larger portion credited to reducing debt; savings and loan associations popularized this method.
  • Appraisal - An estimate of value.
  • Appreciation - increase in value resulting from market forces such as demand stronger than supply.
  • Attachment - a writ issued, beginning or during a legal action commanding sheriff to attach (seize) property, rights and effects of defendant to satisfy possible credit demands of plaintiff if judgment comes out in plaintiffs favor.
  • Attorney-in-fact - anyone who is authorized in writing to perform certain acts for another under written power of attorney; valid only during lifetime of party giving this power.
  • Bill of Sale - a written instrument which is the evidence of transfer of one person's right in in personal property to another.
  • Capital Expenditures - investments of cash for improvements to remain competitive in a business.
  • Capitalized Items - have an economic life of one year or more and the cost is moved to the balance sheet, and then these costs can be written down by depreciation or amortization over time.
  • Cash Flow - profit after principal and interest are deducted from net operating income (NOI).
  • Closing Costs - costs of seller and buyer at conveyance of reality.
  • Closing Statement - a written accounting of funds to seller and buyer at passing of papers.
  • Collateral - a security, such as a mortgage, given to protect debt.
  • Commingling - the mixing of funds held for the benefit of others with the broker's personal or business funds.
  • Commission - money or other valuable consideration given to broker by principal for services rendered; amount is by agreement.
  • Conditional Sales Contract - a contract in which owner retains title until buyer has met all terms and conditions; a familiar device in land sales; also called land contract or installment contract. Buyer acquires equitable title until final payment; after delivery of deed, buyer has legal title.
  • Consideration - something of value exchanged between parties of a contract; money, services, goods or promises.
  • Contract - a legal instrument between two parties to do or not to do something; in reality, it must be in writing to be enforceable.
  • Counter Offer - voids first offer and creates new offer.
  • Covenant - a promise in an agreement or contract agreeing to performance or nonperformance of certain acts, or requiring or preventing certain acts or uses.
  • Confidentiality Agreement - a pact that forbids buyers, sellers, and their agents in a given business deal from disclosing information about the transaction to others.
  • Depreciation - Decrease in value for various reasons.
  • Due Diligence - verification process for all information including, but not limited to, financials, assets, inventory, viability of the business, customer base, employees, etc.
  • Earnest Money - Deposit or binder given with Agreement to Buy.
  • Equity - Value or interest an owner of realty has above any debt on property;difference between value and mortgage debt.
  • Escrow - the holding of something of value by a person (escrowee or escrow agent) for the benefit of other parties.
  • Exclusive Right to Sell - an employment agreement and contract giving the broker the right to receive a commission if the property or business is sold by anyone including the seller during the term of the agreement.
  • Expense - anything that a company buys that has an economic life of less than one year.  It shows up immediately on the income statement.
  • Fiduciary - a position of trust (eg broker to principal).
  • Finder's Fee - fee to broker for arranging loan for client; can also mean fee to broker for locating a property for client.
  • Gross Lease - owner receives rent and pays out expenses such as in apartment leasing.
  • Irrevocable - unchangeable.
  • Judgment - a court action describing indebtedness of one to another.
  • Lease - contract between lessor (landlord) and lessee (tenant) for exclusive possession of realty for specified period under specific terms after which property reverts to lessor.
  • Leaseback - The interest which a lessee has in realty.
  • Letter of Intent (LOI) - a document agreement between a buyer and a seller used in connection with the acquisition of a company.  The letter of intent describes the basic terms and conditions of the transaction between the buyer and the seller, including price, due diligence periods,, exclusivity or no-shops, and the basic conditions to closing the deal.  Customarily presented before a definitive purchase agreement is entered into, the letter of intent provides a road map for the parties involved in the transaction.
  • Lien - a debt; a claim against property for payment of some debt.
  • Net Lease - owner receives rent and tenant also pays out expenses normally paid by owner such as taxes, etc.
  • Procuring Cause - a legal term that means the cause resulting in accomplishing a goal.  Used in real estate (or business brokerage) to determine whether a broker is entitled to a commission.
  • Representation - a statement or condition made that something is true or accurate.
  • Certified Lender Program (CLP) - this process is for the more sophisticated and experienced lenders who have graduated beyond GP status.  Typically, the lender now submits a complete package to the SBA and as a CLP Lender they are guaranteed a 3-day turnaround from the SBA.
  • General Program (GP) - this is the lowest rating and is given to lenders who know little about the SBA process.  These lenders must submit each loan application to the SBA for additional underwriting and ultimate approval.  This process can take up to two weeks with multiple requests for additional information.
  • Preferred Lender Program (PLP) - this is the top designation and enables the respective lenders to approve their own loans with no additional underwriting by the SBA.  Typically, this designation means that the lender has sufficient experience and track history to adhere to SBA standards and make quality loans.
  • Stipulation - to make a special demand for something as a condition of an agreement.
  • Warranty - an expressed of implied statement that a situation or thing is as it appears to be or is represented to be.