Dictionary of Exit Planning Terms

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Cash Flow Statement

An analysis of all the changes that affect the cash account during an accounting period. These changes may be shown either as sources or uses of cash.

Charitable Remainder Trust (CRT)

A trust allowing a person to donate property security to charity, but continue to use the property and/or receive income from the securities while living. The annuity version pays a fixed dollar amount each year; the unit-trust form pays a variable dollar amount based on a fixed percentage of the fluctuating value of the assets given to the charity. A tax election is also allowed, based on the value of the assets donated.

Comparable Transactions Analysis

Comparable Transactions Analysis involves obtaining data regarding other similar, recently sold companies applying the stated to the subject company. In order to estimate its value. For private company transactions, this may be difficult to find, as this information is not generally available in the public domain.

Compiled Financial Statements

A type of financial statements represent the most basic level of service CPAs provide with respect to financial statements. In a compilation, the CPA must comply with certain basic requirements of professional standards, such as having a knowledge of the client's industry and applicable accounting principles, having a clear understanding with the client as to the services to be provided, and reading the financial statements to determine whether there are any obvious departures from generally accepted accounting principles (or, in some cases, another comprehensive basis of accounting used by the entity). It may be necessary for the CPA to perform "other accounting services" - such as creating your general ledger, or assisting you with adjusting entries for your books - before the financial statements can be prepared. Upon completion, a report on the financial statements is issued that states a compilation was performed in accordance with AICPA professional standards, but no assurance is expressed that the statements are in conformity with generally accepted accounting principles. This is known as the expression of "no assurance." Compiled financial statements are often prepared for privately held entities that do not need a higher level of assurance expressed by the CPA.

Certified Value Builder

Certified Value BuilderTM is a designation of The Sellability Score company for management consulting professionals who have completed their training program for the rollout of monthly advisory sessions with business owners that helps guide them in ways to increase the value of their business.

Closing

The formal process of legally completing the purchase of the company through the exchange of cash, promissory notes, and other forms of compensation.

Comparables Analysis

A method of analyzing the value of the firm by reviewing similar recent transactions in the industry.

Cost of Capital

The interest rate of borrowing for a firm's debt and equity. The more risky a firm appears to investors, the cost of capital.