Wholesale Business & Business Broking Glossary

A

Acquisition

The process of purchasing or taking ownership of a business or business assets.

Asking Price

The price a seller seeks for a business, which may differ from the final negotiated sale price.

Asset Sale

A transaction where selected business assets are sold rather than company shares.

B

Business Appraisal

A commercially informed assessment used to help understand how a business may be viewed in the current market.

Business Assets

The tangible and intangible items owned by a business, including equipment, stock, customer relationships, intellectual property, and goodwill.

Buyer Qualification

The process of assessing whether a potential buyer has the financial capacity, experience, or suitability to proceed with a transaction.

Business Broker

A professional who assists buyers and sellers through business sales, acquisitions, negotiations, and transaction management.

Business Risk

Factors that may influence operational stability, profitability, or buyer confidence.

C

Cash Flow

The movement of money into and out of a business, often reviewed by buyers when assessing business performance.

Completion

The stage where transaction conditions have been satisfied and ownership officially transfers to the buyer.

Confidentiality Agreement

A document used to protect sensitive business information before details are shared with potential buyers.

Cost of Goods Sold (COGS)

The direct costs associated with purchasing or producing goods sold by the business.

Customer Concentration

The level of reliance a business has on a small number of customers for revenue.

D

Distribution Network

The systems, suppliers, warehouses, and delivery channels used to move products from wholesalers to customers.

Due Diligence

The review process where buyers assess financial, operational, legal, and commercial aspects of a business before proceeding with a purchase.

E

Earnings

Business income or profit measures often considered during business sale discussions and market assessments.

Earn-Out

A transaction structure where part of the purchase price is paid based on future business performance.

EBIT

Earnings Before Interest and Tax, commonly used to assess business profitability.

EBITDA

Earnings Before Interest, Tax, Depreciation, and Amortisation, often used in business sale and acquisition discussions.

Exclusive Distribution Rights

Rights allowing a wholesaler to distribute specific products within a defined market or territory.

G

Goodwill

The intangible value attached to a business beyond physical assets, including reputation, customer relationships, and market presence.

Gross Margin

The difference between revenue and cost of goods sold, commonly assessed in wholesale businesses.

H

Handover Period

The transition stage where operational knowledge and relationships are transferred to the buyer.

Heads of Agreement (HOA)

A preliminary document outlining key transaction terms before formal contracts are prepared.

I

Information Memorandum (IM)

A document prepared for prospective buyers outlining important information about a business available for sale.

Inventory Turnover

A measure of how quickly stock is sold and replaced over a period.

K

Key Accounts

Major customers that contribute significant revenue to a wholesale business.

L

Letter of Intent (LOI)

A document expressing a buyer’s intention to proceed with a proposed acquisition.

M

Market-Based Assessment

A commercially informed view of business value shaped by market conditions, buyer expectations, and transaction experience.

Management Transition

The process of transferring operational responsibilities, supplier relationships, and business knowledge following settlement.

Multiple Offer Situation

A transaction scenario where more than one buyer submits interest or offers for the same business.

N

Negotiation

The process where buyers and sellers discuss terms, conditions, price, and structure before reaching an agreement.

Non-Compete Clause

A contractual restriction preventing a seller from competing with the business after settlement.

O

Owner Operator

A business operated directly by the owner rather than under a fully independent management structure.

P

Portfolio Acquisition

The purchase of multiple businesses, contracts, or grouped commercial assets as part of a single transaction.

Purchase Price

The final agreed amount paid by the buyer to acquire the business or business assets.

R

Recurring Revenue

Revenue expected to continue regularly through repeat customer activity or ongoing agreements.

Return on Investment (ROI)

A measure used to assess the profitability or performance of an investment.

S

Sale of Shares

A transaction structure where ownership shares in a company are sold rather than selected business assets.

Settlement

The final stage of a transaction where agreed terms are completed and ownership transfers officially occur.

Stock Holding

The inventory or products held by a wholesale business for distribution or resale.

Stock Obsolescence

Inventory that may no longer be saleable or commercially useful.

Supply Agreement

A formal agreement between a supplier and business regarding product supply terms.

Supply Chain

The network involved in sourcing, handling, storing, and distributing products within a wholesale business.

Supplier Dependency

A situation where a business relies heavily on a limited number of suppliers.

Supplier Relationships

Commercial relationships between a wholesale business and its suppliers, often considered important to business continuity and buyer confidence.

T

Trade Customers

Business customers who purchase products for resale or commercial use.

Trade Terms

Commercial terms agreed between suppliers and customers, including pricing, payment terms, and supply conditions.

Transition Period

A period following settlement where the seller may assist the buyer to support continuity and operational handover.

Territory Rights

Commercial rights linked to servicing a specific geographic area.

V

Vendor

The seller of a business or business assets.

Vendor Finance

A transaction arrangement where the seller provides part of the funding to the buyer.

W

Warehouse Operations

The storage, handling, and distribution processes within a wholesale business.

Wholesale Business

A business that supplies goods in bulk to retailers, commercial customers, distributors, or other businesses rather than directly to consumers.

Working Capital

The funds required to support day-to-day business operations.

 

Important Note: These definitions are intended as a practical guide only. Terms may vary depending on the business, transaction structure, and advice provided by the relevant professional advisers.