- Add-back
- A non-recurring or owner-discretionary expense added back to GAAP earnings to compute normalized EBITDA.
- Asset Sale
- A transaction where the buyer purchases specified assets and assumes specified liabilities, versus a stock sale.
- CIM
- Confidential Information Memorandum. The marketing book sent to qualified buyers describing the business, financials, and process.
- Definitive Agreement
- The fully negotiated purchase agreement signed at close, replacing the LOI.
- Due Diligence
- The buyer's investigation of financial, legal, operational, and clinical aspects of the practice, prior to close.
- Earnout
- A portion of consideration paid post-close, contingent on the practice hitting agreed financial targets.
- EBITDA
- Earnings Before Interest, Taxes, Depreciation, and Amortization. The most common cash-flow proxy used in healthcare valuations.
- Escrow
- Funds withheld at close to back indemnification claims for a defined period, typically 12-24 months.
- Indication of Interest (IOI)
- A non-binding indication from a buyer specifying preliminary valuation range and structure.
- Letter of Intent (LOI)
- A non-binding (mostly) outline of the deal: price, structure, exclusivity, and key terms, signed before diligence.
- MSO
- Management Services Organization. A non-clinical entity that provides administrative services to a captive professional entity.
- Normalization
- Adjustments to historical earnings to reflect the run-rate cash flows a buyer can expect.
- Platform Investment
- A buyer's first acquisition in a specialty, around which they build out via tuck-in acquisitions.
- Quality of Earnings (QoE)
- A buy-side or sell-side accounting analysis testing the durability and adjustments behind reported EBITDA.
- Rollover Equity
- The portion of consideration the seller takes as equity in the post-close company, aligning with the buyer's next exit.
- SDE
- Seller's Discretionary Earnings. Common in smaller practices; closer to owner take-home plus add-backs.
- Stock Sale
- A transaction where the buyer purchases the equity of the seller's entity, inheriting all assets and liabilities.
- Tuck-In Acquisition
- A smaller acquisition added to an existing platform to extend geography, capacity, or capability.
- Working Capital Adjustment
- Post-close true-up of the working capital delivered at close versus the agreed target.