Glossary

*Absolute risk*
	The difference between going concern value and liquidation value at the valuation date.

*Acquisition date*
	In the context of an open market transaction, the date of closing.

*Adjusted cost base*
	An income tax term relating to capital property, generally meaning the amount from which capital gains and losses are measured. See paragraph 54(a) of the Income Tax Act.

*Adjusted net book value*
	The amount by which the fair market value of the tangible and identifiable intangible assets (where these are separately quantifiable) of a business, determined on the basis of their value in continued use (adjusted for income tax considerations where appropriate), exceeds the fair market value of the liabilities of the business. When used in the context of risk measurement, this amount often is referred to as tangible asset backing.

*Amalgamation*
	The statutory joining or merging of two or more previously separate corporate entities.

*Amortization*
	The systematic assignment of the cost of intangible assets to expense.

*Appraisal*
	The act or process of determining the value of something. See Valuation

*Appraisal date*
	The date as of which it is necessary to determine the value of something. See Valuation date

*Appraisal remedy*
	See Dissent right

*Asset transaction*
	A term used to describe the acquisition of a business entity pursuant to the direct purchase of its tangible and intangible operating assets. The operating liabilities of the acquired business often are assumed as satisfaction of a portion of the transaction price. Contrast with share transaction.

*Associated corporations*
	Pursuant to the Income Tax Act (Canada), two or more corporations are associated if they are owned or controlled by the same individual or group of individuals.

*Base rate of return*
	An unlevered return on equity that reflects the starting point for establishing a discount rate or capitalization rate pursuant to an en bloc equity investment.

*Benchmark analysis*
	The comparison of an indicated performance measure of a business to a standard, expected, or average measure.

*Blockage discount*
	The decrease in market price resulting from the imbalance of supply and demand that results when market supply is increased pursuant to unusual market activity. In the context of the public stock markets, the decrease in stock market trading price created by the forces of supply and demand when a block of shares larger than normal trading lots is exposed for sale at one time.

*Business risk*
	That portion of total risk arising due to the uncertainty associated with the unlevered prospective discretionary cash flow of a business.

*Business valuation*
	The act of determining the value of, or the estimated value of, a business enterprise, or an interest therein.

*Buy-sell agreement*
	See Shareholder's Agreement

*Canadian Controlled Private Corporation (CCPC)*
	A term defined in the Income Tax Act (Canada) to mean a privately held corporation that is not majority-owned by non-residents of Canada.

*Capital asset pricing model (CAPM)*
	A theoretical comparative risk model that relates risk and return.

*Capital cost allowance (CCA)*
	An income tax term generally meaning the amount of depreciation deducted by a business for income tax purposes. Capital cost allowance rates are set out in Part XI of the Income Tax Regulations. See Tax shield See Undepreciated capital cost (UCC)

*Capital dividend account*
	An account established under the Income Tax Act (Canada) that applies to qualifying privately held corporations whereby certain amounts, including that portion of a capital gain not subject to taxation, can be distributed on a tax free basis to shareholders. See subsection 83(2) of the Income Tax Act (Canada).

*Capital intensive business*
	A business requiring significant capital investment, with resultant comparatively low labour cost per unit of output relative to capital investment per unit of production.

*Capital structure*
	The mix of debt and equity used to finance a business.

*Capitalization rate*
	The rate of return (usually expressed as a percentage) that is used to convert a point estimate of cash flow into value. The inverse of the capitalization rate is referred to as the multiple. Alternately, a divisor used to convert a uniform (or constant) stream of cash flow to a capital amount, or value.

*Capitalized cash flow*
	The present value of a perpetuity determined by dividing a point estimate of cash flow (normally discretionary cash flow) by a capitalization rate, or multiplying (discretionary) cash flow by a multiple.

*Closely held corporation*
	A term used to describe a corporation whose shares are neither listed for trading on a recognized stock exchange nor traded in an over-the-counter market. Technically, a closely-held corporation has less than fifty-one shareholders, excluding employees (Canada). See Privately held company (or corporation)

*Coattail provision (or coattail right)*
	The right afforded to a minority shareholder of a business entitling him or her to sell with the controlling interest in the business at ratable value. Synonymous with tagalong right.

*Compulsory sale provision*
	See Mandatory sale (or 'drag-along') provision

*Confidential information memorandum*
	A compilation of corporate information used in connection with the sale of a business concern in the private sector. A confidential information memorandum is to some degree similar to a prospectus prepared in a public market context.

*Conglomerate*
	A business that is comprised of two or more distinct operating segments or divisions, each of which is a material component of the overall operations.

*Control premium*
	See Premium for control

*Controlling interest*
	An equity interest in either a public company or a privately-held company that by itself is one which carries sufficient votes to be able to elect all (or at least a majority) of the members of the Board of Directors and, through them, to govern the company's business. A controlling interest can be comprised of either the outstanding voting shares that collectively represent more that 50% of the outstanding votes (de jure control) or, in some circumstances 50% or less of the outstanding votes (de facto control).

*De Facto control*
	A term used to describe the situation where one person beneficially owns or holds proxies for the outstanding voting shares of a corporation that collectively do not represent more than 50% of the outstanding votes, but nonetheless effectively controls the corporation, either by virtue of diffusion of ownership, or by indirect means, such as economic control or control by agreement.

*De Jure control*
	A term used to describe the situation where one person beneficially owns or holds proxies for outstanding voting shares of a corporation that collectively represent more than 50% of the outstanding votes.

*Debt servicing costs*
	Annual interest payments and changes in debt principal pursuant to interest bearing debt obligations.

*Depreciated replacement value*
	A term used by real estate and equipment appraisers to describe the amount determined by estimating the replacement cost (new) of buildings and equipment less an amount for depreciation and obsolescence to equate the replacement cost (new) to the depreciated assets being appraised.

*Depreciation*
	The systematic assignment of the cost of tangible assets to expense.

*Derivative securities*
	A financial instrument whose value is a function of another instrument. Examples include stock options and warrants.

*Dilutive securities*
	A financial instrument that could result in a reduction in the ratable value of the common shares of a company.

*Discount for illiquidity*
	The amount by which the en bloc value of a business or ratable value of an interest therein is reduced in recognition of the expectation that a ready market for the disposition of said interest does not exist. Synonymous with marketability discount.

*Discount for non-control*
	The amount by which an interest in a business is reduced from its ratable portion of en bloc value in recognition of the inability to unilaterally control the business.

*Discount rate*
	A rate of return used to convert a monetary sum, payable or receivable in the future, into present value. Alternately, a rate of return used to convert a series of future anticipated cash flow to a present value.

*Discretionary cash flow*
	Cash flow from operations less income taxes thereon, net trade working capital requirements, sustaining capital reinvestment and other capital additions, net of the related income tax shield. Normally, discretionary cash flow is determined prior to debt servicing costs.

*Dissent right*
	Where provided in the incorporating statute of a company, a statutory right enabling a minority shareholder in specified circumstances to cause the corporation in which he or she beneficially owns shares to purchase his or her shareholding at fair value. Synonymous with appraisal remedy.

*Earnout*
	A term used to describe a method of structuring a purchase and sale transaction whereby the quantum of the purchase price is established in part by the future performance of the business being acquired, and a portion of the purchase price is conveyed or paid at a specified date(s) subsequent to the closing of the transaction.

*EBIT*
	Earnings before interest and taxes.

*EBIT-DA*
	Earnings before interest, taxes, depreciation and amortization. A measure of the operating cash flows of a business before changes in net working capital.

*Economic life*
	The period over which property may be profitably used, a product may be profitably manufactured and marketed, or a service rendered.

*Economies of scale*
	The decreases in combined operating expenses and/or increases in combined revenues which result following the merging of two or more business operations. See Synergy See Post-acquisition net economic value-added (or benefits) See Strategic advantage

*En bloc value*
	The value of the assets or ownership interests of a business viewed as a whole.

*Enterprise value*
	The total value of a business including both its interest bearing debt and equity components.

*Equity value*
	The value of a business to all of its shareholders.

*Externally financed transaction*
	A term used to describe the purchase of a business interest where the funding for the acquisition is provided by the purchaser through sources external to the business being acquired. Contrast with internally financed transaction.

*Fair market value*
	The highest price available in an open and unrestricted market between informed and prudent parties, acting at arm's length and under no compulsion to act, expressed in terms of cash.

*Fair value*
	A value term commonly used in connection with minority shareholder dissent and oppression remedy rights, describing the basis upon which the acquisition price for the minority shares is to be determined.

*Family control*
	A term used to describe that circumstance where family members, who collectively own sufficient voting shares in a company to control it, are presumed to act in concert to exercise control over the economic direction and liquidity of their collective investment. In Canada, the concept of family control principally has been put forward in the context of fair market value determinations required for income tax purposes.

*Financial leverage*
	The use of interest bearing debt or other fixed payment financial obligations in the capital structure of a business.

*Financial risk*
	The portion of total risk associated with the use of financial leverage in the capital structure of a business.

*Financial synergies*
	That portion of total post-acquisition synergies relating to the benefits associated with a more efficient capital structure or lower cost fiancing.

*Forced liquidation*
	The sale of the assets where an immediate cessation of the business and disposition of assets is assumed on an 'as is/where is' basis. In the context of equipment appraisal, forced liquidation value contemplates the sale of equipment assets at auction. Contrast with voluntary liquidation.

*Going concern*
	A business enterprise that is both conducting operations at a given date, and has every reasonable expectation of doing so for the foreseeable future after that date.

*Going concern risk*
	The difference at the date of valuation/acquisition between going concern value and tangible asset backing (adjusted net book value).

*Going concern value*
	The present value of all future benefits expected to accrue from ownership, where a business operation is expected to continue to operate (usually) indefinitely into the future.

*Goodwill*
	The difference between going concern value and the sum of the net tangible assets and identifiable intangible assets (where these can be separately quantified). See Individual goodwill See Personal goodwill See Value to owner

*Group control*
	A term used to describe that circumstance where a group of shareholders, who otherwise deal on an arm's length basis, collectively own sufficient voting shares in a privately-held company to control it, are presumed to act in concert to exercise control over the economic direction and liquidity of their collective investment. In Canada, the concept of group control principally has been put forward in the context of fair market value determinations required for income tax purposes.

*Hard right of first refusal*
	A right of first refusal whereby the shareholder wishing to divest of his or her interest solicits third party offers, the highest of which is presented to the other shareholder(s) who are given the opportunity to acquire the offering shareholders interest on the same price and terms as those offered by the third party. Contrast with soft right of first refusal.

*Holding company*
	A company with (usually) no active business operations, owning passive investments in assets such as real property, shares in publicly-held companies, and shares in privately-held operating companies. The earnings generated by a holding company (in the form of rent or dividends, for example) normally are of less significance from a value standpoint than is the appreciating value of the underlying investments themselves.

*Horizontal analysis*
	The process of comparing actual or projected results of a business, normally with the objective of detecting trends or anomalies.

*Hurdle rate of return*
	See Threshold rate of return

*Identifiable intangible assets*
	Assets that can be transferred separate from the business that owns them and which have intrinsic value in a going concern scenario. Contrast with goodwill.

*Individual goodwill*
	The economic advantage that accrues to a business by virtue of its employment of a given individual who has abilities, business contacts, good name and reputation that could be, or would be, harmful to the economic well-being of the business should he or she leave the employ of the business and compete with it. In contrast with personal goodwill, individual goodwill does not expire at the time of the loss of interest, retirement, or death of said individual. Rather, the business has the capacity to substitute another individual to fill the role played by said individual prior to his retirement or death. In an open market context, it is non-competition agreements that result in individual goodwill having commercial value.

*Industry specific activity ratios*
	Commonly used criteria within a specific industry used to gauge an element of business value. Industry specific activity ratios often are referred to as rules of thumb.

*Insolvency*
	The inability of an individual or corporation to pay debt obligations as they become due.

*Intangible operating synergies*
	That portion of total post-acquisition synergies relating to strategic advantage or other benefits that cannot be readily segregated and analyzed on an individual basis.

*Intermediaries*
	External advisors involved in the sale and purchase of business interests.

*Internal rate of return (IRR)*
	That discount rate which reduces to equality the present value of expected cash outflows to the present value of expected cash inflows. Stated in the context of a return on invested equity, an internal rate of return is the aggregate after tax return on levered equity expected over the life of the investment.

*Internally financed transaction*
	A transaction pursuant to which all or part of the outstanding shares or assets of a business are sold to a purchaser who requires the business being purchased to fund all, or part of, the purchase price out of funds it generates subsequent to purchase. Contrast with externally financed transaction.

*Intrinsic value*
	A notional market value, based upon rates of return required by investors given economic and business conditions existing at the valuation date, without consideration of possible synergies or economies of scale that might accrue in differing degrees to arm's-length purchasers. Synonymous with stand-alone value.

*Invested equity*
	See Levered equity

*Leverage*
	The relationship between interest bearing debt and equity in a business (financial leverage). Alternately,the effect of fixed charges on after tax earnings and/or discretionary cash flow (operating leverage).

*Leveraged buyout*
	A transaction pursuant to which an acquirer borrows against the assets of the acquired business to fund all, or part of, the purchase price.

*Levered equity*
	That portion of an aggregate value determination (or purchase price) represented by the difference between the aggregate value determination and the amount of interest bearing debt deemed appropriate for the business interest being valued (or acquired). Synonymous with invested equity.

*Liquidation*
	The process of converting assets into cash.

*Liquidation value*
	The net amount of money, if any, available to equity owners following a voluntary liquidation, a reorganization of a business pursuant either to a proposal to creditors, or a liquidation of a business pursuant to a receivership or other proceeding under The Bankruptcy Act (forced liquidation).

*Liquidity*
	The ability to readily convert non-cash assets into cash for reasonably certain proceeds.

*Maintainable after tax earnings from operations*
	After tax earnings from operations that reasonably can be expected on a year-in year-out basis prospectively from the valuation date, expressed in dollars current to the valuation date.

*Management agreement*
	An agreement made between two parties pursuant to which one of the parties agrees to offer either general or specific management services to the other for a specified period of time.

*Mandatory sale (or 'drag-along') provision*
	The obligation for minority shareholders to tender their shares on the same terms and conditions as a specified majority of shareholders are prepared to do, pursuant to an offer to acquire all of the shares of a corporation.

*Marketability discount*
	See Discount for illiquidity

*Minority discount*
	The reduction from the pro rata portion of the en bloc value of the assets or ownership interests of a business as a whole to reflect the disadvantages of owning a minority shareholding. A minority interest may suffer a discount for reasons of: the absence of the power of control and the resultant inability to dictate such matters as the future direction of the corporation, the election of Directors, the performance of the investment because of the inability to dictate dividend payments, or the sale of the shareholding where there are legal or contractual restrictions with respect to such a sale and a sale of all of the shares of the corporation (i.e. a discount for non-control); and/or the inherent lack of liquidity or marketability of the investment (i.e. a discount for illiquidity).

*Minority shareholding (shareholder)*
	Any shareholding in either a public company or a privately-held company that is not a control shareholding.

*Multiple*
	The reciprocal of the capitalization rate.

*Negative redundancy*
	A term used to describe the equity amount required to be injected into a given business entity in order to 'normalize' its balance sheet, such that following said equity injection the business interest owes an 'appropriate' amount of interest bearing debt vis a vis its revised equity balance.

*Net book value*
	with respect to individual assets or liabilities, the capitalized cost, or otherwise determined book value, of an asset or liability less accumulated depreciation or amortization as it appears on the books of account of the enterprise; or with respect to a business enterprise, the difference between total assets (net of depreciation and amortization), and total liabilities of an enterprise as they appear on the balance sheet. Depending on what is referred to, this term is synonymous with the terms book value, net worth and shareholders' equity.

*Net income (loss)*
	The amount remaining when all expenses, (including income tax), incurred and accrued during an accounting period, are deducted from all revenues received and accrued during that same period.

*Net realizable value*
	The net proceeds obtainable upon the sale of an asset, after providing for all costs of disposition, including income taxes.

*Net trade working capital*
	The amount by which current assets related to the principal operating activities of the business (e.g. accounts receivable and inventories) exceed current liabilities that have arisen from the business' operating activities (e.g. accounts payable and accrued liabilities). Contrast with working capital that includes all current assets and current liabilities.

*Nominal rate of return*
	A discount rate that includes both an inflation component and a 'real rate of return', as contrasted with a 'real rate of return', which does not include an inflation component.

*Non-competition agreement*
	An agreement made between two parties pursuant to which one of the parties agrees not to compete with the other party for a specified period of time, usually within a specified geographic area and within identified parameters of product or service. See Individual goodwill

*Non-identifiable intangible assets*
	Those intangible assets that cannot be readily segregated from the operations of a business that is a going concern. Examples include deferred charges and goodwill. Contrast with identifiable intangible asset.

*Notional market*
	A term used to describe circumstances where it is necessary to determine fair market value, fair value, or some other value in the absence of open market negotiations.

*Open market*
	A term used to describe the market in which arm's length, negotiated transactions take place.

*Operating leverage*
	The use of fixed costs in the operations of the business. Contrast with financial leverage.

*Opportunity cost*
	The value of benefits sacrificed in selecting a course of action among alternatives. In relation to value determination, the value of alternative investments not made.

*Oppression remedy*
	Where provided in the incorporating statute of a company, a statutory right enabling a minority shareholder to claim that the corporation in which he or she is a shareholder has acted in a manner he or she believes contrary to the best interest of his or her shareholding.

*Over-the-counter market*
	The trading of securities or commodities not listed on an established stock exchange.

*Partnership*
	A form of business organization where persons carry on a business in common with a view to profit. This term does not apply to the relationship which exists between owners of a corporation.

*Personal goodwill*
	The unique advantage enjoyed by a given individual which arises from his or her particular abilities, personal characteristics, good name and reputation, and which is not transferable by contract or otherwise. The term personal goodwill can be used to describe either economic advantage, non-economic advantage, or a combination of both.

*Post-acquisition net economic value-added (or benefits)*
	The capitalized value of economies of scale and/or strategic advantages that a prospective purchaser of a business interest perceives may accrue from its acquisition. This sometimes is referred to as post-acquisition value-added. See Purchaser-perceived net economic value added See Strategic advantage See Synergy

*Premium for control*
	The amount by which the value or price of a share that forms part of a controlling interest exceeds the value or price of a share of a non-controlling interest where it is determined that the excess is attributable to the benefits associated with a controlling interest.

*Price*
	The consideration paid in a negotiated open market transaction involving the purchase and sale of an asset.

*Price earnings ratio*
	The reciprocal of the capitalization rate, commonly referred to as the multiple.

*Primary offering*
	The offering for sale of treasury share capital. A primary offering results in the proceeds accruing to the issuer with a simultaneous dilution of the percentage ownership interest of pre-offering business owners.

*Privately held business interest*
	An en bloc, controlling interest, or minority shareholding in a privately-held company, or all or part of the business of a privately-held company represented by its net operating assets or all or one or more partnership interests in a partnership, or part of the business of a partnership.

*Privately held company (or corporation)*
	Technically, a business that is incorporated, has less than fifty-one shareholders excluding employees (Canada), and does not offer its shares to the public. A privately-held company generally is defined as one that does not offer its shares to the public. See Closely held corporation

*Pro-forma*
	A term applied to a document or statement which indicates the anticipated effects of stated assumptions or contractual commitments which have not yet been completed.

*Proposal to creditors*
	A scheme for extension of time, and/or reduction or rearrangement of debt, put forward to creditors by a debtor.

*Proprietorship*
	A form of business organization where one individual owns an unincorporated business concern.

*Pro-rata value*
	See Ratable value

*Public company*
	A company whose equity shares and/or issued debt are traded on an established stock exchange or in an over-the-counter market. Alternately, a company that is not privately-held or closely-held as defined in Corporations and Income Tax statutes.

*Purchaser-perceived net economic value added*
	See Post-acquisition net economic value-added (or benefits) See Strategic advantage

*Ratable value*
	That portion of the en bloc value represented by each ownership percentage. Synonymous with pro-rata value.

*Rate of return*
	An amount of income realized or expected on an investment, expressed as a percentage of that investment. See Capitalization rate See Discount rate

*Rate of return on levered (invested) equity*
	The rate of return that results when an annual actual or expected (after tax) operating result is divided by shareholder's equity at a given point in time, expressed as a percentage. In this context, the term 'operating result' can mean net income or discretionary cash flow(which generally is more appropriate).

*Real Estate*
	An identified parcel or tract of land, including improvements, if any.

*Real property*
	The interests, benefits, and rights inherent in the ownership of real estate.

*Real rate of return*
	A discount rate, or capitalization rate, that excludes consideration of inflation, as contrasted with a nominal rate of return, which includes both an inflation component and a real rate of return.

*Recaptured depreciation (recapture)*
	This term usually is used in an income tax context although it is not specifically found in the Income Tax Act. Recaptured depreciation is measured as the excess of the proceeds of disposition of depreciable property of a prescribed class (to the extent of original cost) over the undepreciated capital cost of assets in the class. If no further assets of that class are purchased in the year, then the excess is added to income. See section 13 of the Income Tax Act (Canada).

*Receivership*
	The legal status of a debtor for whom a receiver has been appointed.

*Redundant assets*
	Assets which are excess to (and which therefore do not influence) the going concern value of the operating assets of a business. Redundant assets sometimes are referred to as non-operating assets.

*Refundable dividend tax on hand (RDTOH)*
	A tax account applicable to Canadian Controlled Private Corporations intended to create an integrated income tax system such that an individual taxpayer essentially is in the same net after tax position regardless of whether investment income is earned directly or through a corporate entity.

*Replacement cost (new)*
	The current cost of a similar new item having the nearest equivalent utility as the item being appraised.

*Reproduction cost (new)*
	The current cost of an identical new item.

*Right of first refusal*
	The right afforded to a shareholder in a company whereby he or she can elect to acquire another shareholder's interest before it is sold to another party. See Hard right of first refusal See Soft right of first refusal

*Risk free rate of return*
	The prevailing rate of return on money market investments such as long term government bonds, being investments which are generally free from substantial credit risk, are priced to reflect a relatively long term holding period, and hence, aside from inflation related purchasing power risk, put the investor in a position that in all practical respects is risk-free. These securities typically are fixed in income as well as in principal and, hence, generally do not offer any potential for capital growth.

*Rollover*
	An income tax term used to describe a tax-deferred transfer of assets among related parties.

*Rules of thumb*
	See Industry specific activity ratios

*S.W.O.T. analysis*
	The process of assessing the strengths, weaknesses, opportunities and threats of a given business.

*Safe income*
	This term is not defined in the Income Tax Act, but is generally taken to mean the amount of post-1971 retained earnings in a Canadian corporation that has already been taxed and from which a tax-free dividend can be paid to shareholders.

*Secondary offering*
	The offering of previously issued share capital for sale by the present owner.

*Security analysis*
	The analysis of the publicly traded securities of a business based on financial models and utilizing publicly available market data.

*Share for share exchange*
	A share transaction whereby the consideration received is in the form of shares of the acquiring company.

*Share transaction*
	The sale of a business interest through the purchase and sale of the share capital of the corporation overlying it. Contrast with Asset transaction.

*Shareholder's Agreement*
	A contract between the equity holders of a corporation that defines the rights, privileges and obligations of those individuals.

*Shareholder's equity*
	The aggregation of a company's paid-in capital, retained earnings, and contributed, appraisal and other surpluses. Alternately, the result obtained when the net book value of all liabilities of a company are subtracted from the book value of all that company's assets. See Net book value

*Shotgun clause*
	An agreement whereby one shareholder of a corporation offers to purchase the shares of another, and the shareholder receiving the offer must either sell to the offering shareholder on the price and terms presented in the offer, or must acquire the shares of the offering shareholder on the same price and terms as those offered.

*Small business deduction*
	A reduction in the tax rate applicable to Canadian Controlled Private Corporations on the first $200,000 (Federal) of income earned on active business carried on in Canada. The deduction must be shared among associated corporations.

*Soft right of first refusal*
	A right of first refusal whereby the shareholder wishing to divest of his or her interest first offers that interest to the other shareholder(s). If the other shareholder(s) choose not to accept the offer, the offering shareholder is free to divest of his or her interest to third party acquirers at a price and on terms no less favourable to the offering shareholder than those offered to the other shareholder(s). Contrast with hard right of first refusal.

*Special interest purchaser*
	A purchaser that can, or believes it can, enjoy post-acquisition economies of scale (or synergies) or strategic advantages by combining the acquired business interest with its own. See Post-acquisition net economic value-added (or benefits) See Strategic advantage

*Squeeze-out*
	A corporate action taken pursuant to applicable corporate law by a controlling shareholder with 90% or more of the voting shares of the company to remove the minority shareholders. In such circumstances, the minority shareholders are able to exercise an Appraisal Remedy.

*Stand-alone value*
	The value of a business interest determined without reference to prices that might be paid by purchasers who perceive post-acquisition net economic value-added. Synonymous with intrinsic value.

*Stock exchange*
	A facility where members can trade, on their own behalf or on behalf of clients, corporate equity shares, debt or other financial instruments.

*Strategic advantage*
	In the context of purchaser perceived post-acquisition net economic value-added, those things that it is believed will result in short-term risk reduction, or possible economies of scale that are not immediately available but may be realized over the long term.

*Sustaining capital reinvestment*
	The capital outlay required each year to maintain operations at existing levels.

*Synergy*
	The effect created by economies of scale or other post-acquisition benefits. The realization of increased discretionary cash flow (as a result of the combination of two or more business operations over and above the aggregate discretionary cash flow of the two businesses viewed separately), or reduced risk in attaining same.

*Tag-along provision (rights)*
	See Coattail provision (or coattail right)

*Tangible asset backing*
	See Adjusted net book value

*Tangible operating synergies*
	That portion of total post-acquisition synergies related to those benefits that can be readily segregated and analyzed in isolation.

*Tax shield*
	The present value of the anticipated tax savings which will accrue in the future as a result of the owner of capital (depreciable) assets claiming capital cost allowance in respect of them.

*Threshold rate of return*
	A benchmark predetermined rate of return on equity (or discount rate) criteria that is applied to a projected cash flow (generally discretionary cash flow) that includes both inflation and a real rate of return, where financial leverage and debt servicing costs are excluded, and where purchaser perceived net economic value-added (generally) is taken into account. Synonymous with hurdle rate.

*Undepreciated capital cost (UCC)*
	The remaining balance of depreciable capital assets used as the base for future capital cost allowance claims.

*Unlevered rate of return on equity*
	A discount rate, or capitalization rate, that assumes a debt-free capital structure for a given business.

*Valuation*
	The act or process of determining the value of something. See Appraisal

*Valuation date*
	The specific point in time at which a value or price determination is made. See Appraisal date

*Value*
	A return or equivalent in goods, services, or money for something exchanged.

*Value in exchange*
	The worth of an asset, or pool of assets, if sold in the open market.

*Value in use (or value in continued use)*
	The value of the tangible assets of an operating business, viewed as a pool of assets in a specific use. Value in use is determined referable to the contribution of that asset pool to the ongoing business.

*Value to owner*
	The value of an asset to the owner of it. The term value to the owner can be used to describe either owner-perceived economic advantage, non-economic advantage, or a combination of both. Viewed solely in an economic context value to the owner may be equal to, or greater than, fair market value. It is never less than fair market value. Where value to the owner is greater than fair market value, the increment over fair market value often is attributable to personal goodwill.

*Vendor take-back*
	Where the vendor finances all or part of the acquisition price in an open market transaction pursuant to accepting non-cash consideration that defers payment (e.g. a note payable or preferred shares of the acquirer).

*Vertical analysis*
	The process of analyzing the financial statements (normally) with the purpose of understanding financial relationships and detecting anomalies.

*Voluntary liquidation*
	The sale of the assets and wind-up of operations that is controlled by the owners of the business, and where residual value normally is expected to be realized by the owners. Contrast with forced liquidation.

*Weighted average cost of capital (WACC)*
	A rate of return determined as the weighted average of the after-tax cost of debt and levered equity. WACC assumes an ability to deduct interest expense when calculating taxable income and can be used either as a discount rate (inclusive or exclusive of inflation) or a capitalization rate. When applied to a stream of cash flows, the result is enterprise value.

*Widely held corporation*
	See Public company

*Wind up*
	The process of discontinuing the operations of a corporate entity.

*Working capital*
	The amount by which current assets exceed current liabilities. Working capital incorporates all assets and liabilities of a current nature, contrasted with net trade working capital that relects only those current assets and liabilities arising from the operations of the business.