Terms & Definitions

Healthcare M&A Terms & Definitions

TERM DEFINITION
Addback A non-recurring, personal, or one-time expense that is unrelated to operating the company. (view example)
Adjusted EBITDA Adjusted EBITDA (which stands for Earnings Before Interest Taxes Depreciation and Amortization) is your company’s true or normalized Net Profits after accounting for one-time, non-recurring, or personal expenses.
Blind Summary An overview of your company highlighting certain geographies, financial metrics, services, and purchase price. (view sample)
Change of Ownership / CHOW A CHOW is a Change of Ownership where the buyer is officially approved by the state, CMS, or governing body to legally take over your business.
Confidential Information Memorandum / CIM The foundational document used to market your company that highlights all aspects of your business.
EBITDA EBITDA stands for Earnings Before Interest Taxes Depreciation and Amortization. It is a proxy for your company’s cash flow.
Exclusivity An agreed upon period of time, typically spanning 60-90 days, where the seller agrees to ‘exclusively’ work on selling his/her company to a selected buyer.
Indication of Interest / IOI A less formal way to submit an offer and is used to communicate a buyer’s ‘interest’ in working towards a LOI.
Letter of Interest / LOI A letter of intent is a document outlining the understanding between two or more parties which understanding they intend to formalize in a legally binding agreement.
Listing Book (See “Confidential Information Memorandum / CIM”)
Material Adverse Effects / MAEs A change in circumstances that significantly reduces the value of a company.
Non-Compliance Disclosures Identifying and disclosing areas of non-compliance (regulatory or contractual) with a prospective buyer.
Non-Disclosure Agreement / NDA A legal contract that the buyer will not take any action to adversely affect your company once they know your identity and certain company information.
Purchase and Sale Agreement / PSA The definitive document, detailing all aspects of the transaction
Recapitalization The process of changing a company’s debt to equity ratio, by either adding more equity to its capital or adding more debt (debt recapitalization)
Working Capital Short Term Assets less Short -Term Liabilities and Debt

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Contact TEAM M+A of American Healthcare Capital