THE WORKING GLOSSARY
Start with the vocabulary.
Short definitions to make the guides easier to use. These are orientation notes, not complete statements of tax or legal rules.
- Enterprise value
- A transaction valuation concept for the operating business. The purchase agreement determines how it translates into equity proceeds.
- Working-capital adjustment
- A negotiated adjustment comparing delivered working capital with an agreed target. Definitions and exclusions can materially change proceeds.
- Earnout
- A contingent payment tied to agreed future results or events. Terms determine payment risk and require separate tax analysis.
- Asset sale
- A transaction involving business assets; purchase-price allocation and each asset's tax character matter.
- Equity sale
- A transfer of ownership interests. Entity type, elections, and transaction terms can alter the tax result.
- Installment sale
- A sale with payments received after the tax year of sale that may qualify for installment reporting. Not every gain component qualifies.