Dictionary of Exit Planning Terms

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Tangible Asset

Assets other than real estate that physically exists. Examples would be business equipment and vehicles.

Term Insurance

A type of insurance whereby the insured is covered for a limited period of time. The policy has a death benefit value that is paid should the insured died before the end of the term. that

Treasury Bond

A negotiable, coupon-bearing debt obligations issued by the US government and backed by its full faith and credit, having a maturity of more than seven years. Interest is paid semi-annually. It is exempt from state and local taxes.

Trustee

The person named in a trust document who will manage the property owned by the trust and distribute any income or property, according to the document. A trustee can be an individual or corporate fiduciary.

Tax Loss Carry-Forward

A tax loss that can be carried forward for a number of years to offset future taxable income. Often can be utilized by the buyer in a merger or acquisition.

Terminal Value

A method for determining the residual value of a company at the end of the forecasted period of a discounted cash flow analysis. There are two methods to calculate Terminal Value.  One is the Perpetuity Growth Model, which assumes that the cash flows will continue.  The second method is the Exit Multiple Approach, which assumes that the business will be sold at the end of the forecast period.

Trust

A tax entity created by a trust agreement. This entity distributes all or part of its income or assets to beneficiaries, as instructed by the trust agreement