Sell My Small Business Glossary
Essential terms from Sell My Small Business guides, each defined in plain language with the evidence behind it.
Sale Terms
Accounts Receivable
Accounts receivable are billed amounts customers still owe, and their treatment at a sale affects the cash available to keep work moving.
Inventory at Close
Inventory at close is the usable stock delivered with a business when ownership changes, so the new owner can continue filling customer orders.
Working Capital Peg
A working capital peg is the agreed target for operating current assets and liabilities delivered with a sale to support continuity.
Revenue
Customer Concentration
Customer concentration is dependence on a narrow group of customers, which can leave revenue exposed if a major account reduces spending or leaves.
Repeat Revenue
Repeat revenue comes from customers who buy again over time; it shows a pattern of demand but does not mean future purchases are committed.
Buyer Risk
Key Person Risk
Key person risk is the exposure a business faces when essential knowledge, decisions, or relationships depend on one employee or manager who could be temporarily unavailable or leave.
Management Depth
Management depth is a team's demonstrated ability to make decisions and carry out work without the owner, beyond the titles shown on an organization chart.
Owner Dependence
Owner dependence is the risk that sales, decisions, or delivery rely on the departing owner, so past business results may not continue after a sale.
Personal Goodwill
Personal goodwill is trust tied to an owner's own reputation and relationships, which may not follow the business when that owner leaves.
Diligence
Proof of Cash
Proof of cash reconciles financial records with money entering and leaving the business so a buyer can see what cash activity supports.
Quality of Earnings
Quality of earnings reviews the support and repeatability behind reported profit, including the limits of what a financial review tested.
Revenue Verification
Revenue verification checks whether reported sales connect to customer activity and deposits, while leaving other earnings questions open.
Transition
Seller Handover
Seller handover is the transfer of operating knowledge and relationships from an outgoing owner to the people who will run the business next.
Transition Support
Transition support is help an outgoing owner may give the new team during handover, with its scope and expectations discussed before a sale.