Lien
This is a charge or hold on assets usually by a creditor until the indebtedness is satisfied.
Lease Assignment
When selling a business that occupies leased premises, a buyer typically “assumes” the lease. A tenant may assign his “right, title and interest” in that lease to an “assignee”.
Indication of Interest
Similar to a Term Sheet. An indication of Interest (IOI) is a non-binding letter used to express interest in acquiring the business.
Indemnification
In a purchase agreement, indemnification provides protection to the buyer if the seller makes representations and warranties that turn out to be inaccurate, or the seller fails to perform a covenant, and the breach results in additional costs or damages to the buyer post-transaction.
Holdback
In a purchase agreement, this provision provides for a portion of the consideration to be deposited in escrow or withheld by the buyer to be applied toward future indemnification claims by the buyer.
Executive Summary
This is a 1-page profile of a business that is used to solicit buyer interest. It usually has all identifying information removed.
Escrow Holder
This is a neutral third-party that prepares routine financial, compliance and legal documents related to the transfer of a business and holds funds until the parties fulfill specified conditions.
Covenant
This is an agreement between buyer and seller that restricts each party from taking certain actions, particularly during the Letter of Intent period and prior to closing.
Contingent Liability
This is a potential obligation that arises from past events and will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the business.
Confidentiality Agreement
This is a document signed by potential buyers that requires them to keep the information contained in the CIM, other evaluation materials and all discussions completely confidential.
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