Dictionary of Exit Planning Terms

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Lehman Formula

The industry standard commission rate, which is a sliding scale of 5-4-3-2-1 percent on each successive million-dollar purchase price.

Letter Testamentary

Also referred to as Letters of Administration, this document is is generated by probate court authorizing the executor to act in charge of distributing assets as the decedent wished, along with any other responsibilities to dissolve the state. If the decedent had no will, next of kin can take the death certificate to the probate court and be appointed the Administrator of the state.

Liquidating Value

The value of a company based on the market value of its assets, net of liabilities.

Letter of Intent

A letter from one company to another, acknowledging willingness and ability to enter into a sales transaction. A Letter of Intent is often used to acknowledge that a proposed acquisition or merger is being seriously considered. Letters of Intent are also use by lending institutions to indicate that they are interested in lending certain amounts of money at certain specific times and conditions.

A Letter of Intent is not a contract, and cannot be enforced; it is simply a document stating serious intent to enter into a transaction.