Dictionary of Exit Planning Terms

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S

S Corporation

A sub-chapter S Corporation is an entity under IRS regulations that provides the same liability limitations as a C corporation, but does not pay corporate taxes. Corporate income tax flows directly to the shareholders in proportion to their ownership and each shareholder is responsible for paying his or her tax liability.

Stockholder

An owner of an incorporated business, the ownership being evidenced by stock certificates.

Synergy

A situation whereby the combination of two or more entities results in a new entity that is worth more than the sum of the parts.

Stock Sale

A form of acquisition whereby all or a portion of the stock of the corporation is sold to the purchaser.

Strategic Acquisition

The purchase of a business that supplements the buyer's strengths or complements the buyer's weaknesses. This "extra" value often increases the value the buyer is willing to pay above a value strictly determined by financial return.