The words in your term sheet.

The buyer acquires specific assets and liabilities rather than the company itself. Your legal entity survives the sale and you wind it up afterwards.

Buyers prefer this because it leaves unknown liabilities behind. It can also change your tax position significantly, so model both structures with an accountant before agreeing.

Annual recurring revenue. The contracted, repeating revenue of the business over twelve months, excluding one-off fees and services.

Define it consistently. Counting implementation fees or non-renewing annual deals inflates the number and gets caught in diligence.

A minimum threshold of losses before the buyer can claim against your warranties. Below the basket, small claims aren't worth anyone's time.

Ask whether it's a true deductible or a tipping basket, because a tipping basket pays from the first dollar once crossed.

A clause triggered when the company's ownership changes. Common in customer contracts, leases and software licences.

One of the three things that genuinely kills deals. Read your top ten customer contracts before you go to market.

The organized collection of documents a buyer reviews during diligence, usually a shared folder with controlled access.

Assemble it before you sign a letter of intent. Doing it reactively is the most common cause of a slow close.

The buyer's verification of the business across financial, legal, technical and commercial areas before closing.

Two to four weeks in a well-run process. Ask a buyer how long theirs takes and whether workstreams run in parallel.

Part of the purchase price paid later, conditional on the company meeting agreed targets after closing.

Discount it for both probability and time before comparing to a cash offer. We don't use them.

Earnings before interest, tax, depreciation and amortization. A proxy for operating profit used widely in private equity.

Ask what adjustments are in an adjusted EBITDA figure. That's where the disagreements live.

A portion of the price held by a third party for a period after closing, available to the buyer if warranties turn out to be untrue.

Typically 5% to 15% for twelve to eighteen months. Negotiate both the amount and the release schedule.

A binding commitment not to negotiate with other buyers for a set period, usually starting at the letter of intent.

Keep it as short as diligence realistically needs. Open-ended exclusivity hands the buyer all your leverage.

Your promise to compensate the buyer for specific losses, typically arising from breaches of warranty or known risks.

Check the cap, the survival period and any carve-outs that are uncapped. Fundamental warranties often survive longer.

A short document setting out price, structure, timeline and exclusivity. Mostly non-binding, except confidentiality and exclusivity.

Your leverage peaks here. Everything you care about is easier to negotiate now than in the purchase agreement.

The right of preferred shareholders to be paid before common shareholders in a sale, usually 1x the amount invested.

Model the waterfall before you start a process. It determines whether a sale produces anything for the founders.

Revenue from last year's customers this year, including expansion and contraction. Above 100% means the base grows without new logos.

The single most valuable metric in a SaaS valuation. Show it by cohort and segment if the headline number is unflattering.

A commitment not to start or work for a competing business for a period after the sale.

Check the scope and the definition of competing. An overly broad clause can constrain your next decade, and enforceability varies by state.

Money with no return date. A permanent-capital owner buys companies to hold indefinitely rather than sell inside a fund's life.

Test the claim: ask when the vehicle owning your company must return capital, and how the buyer profits if it never sells.

Documentation showing a buyer actually has the money: a bank statement, a fund commitment, or a lender's commitment letter.

Ask for it before sharing anything confidential. A pre-qualification from a lender is not a commitment.

The binding contract that transfers ownership. Contains the price, warranties, indemnities and closing conditions.

Usually thirty to eighty pages. Read the disclosure schedules yourself, because that's where your personal exposure is defined.

Equity in the acquiring entity taken as part of your consideration instead of cash, giving you a stake in the next sale.

Often called a second bite. Value it at zero when comparing offers, then treat anything it returns as upside.

Seller's discretionary earnings. Profit plus the owner's salary and personal expenses, used for owner-operated businesses.

Common on marketplaces and below about $2M in revenue. An SDE multiple and a revenue multiple are not comparable numbers.

Part of the price paid by the buyer over time, as a loan from you to them, with interest.

You become a lender to the company you just sold. Check security, subordination and what happens if the buyer defaults.

The buyer acquires the shares of the company, taking on the entity with its history, contracts and liabilities intact.

Simpler for the seller and riskier for the buyer, which is why buyers negotiate harder on warranties in a share deal.

The window after a broker or marketplace engagement ends during which they can still claim a fee on introduced buyers.

Twelve to twenty-four months is common. Check how introduced is defined before you sign anything.

A post-closing adjustment ensuring the company is delivered with a normal level of working capital, with the price adjusted for any difference.

The target is negotiable and deferred revenue treatment matters enormously in SaaS. Model it before agreeing the peg.