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American Healthcare Capital Brochure

American HealthCare Capital ∙ Executive Offices   4333 Admiralty Way, Marina del Rey, CA 90292 ∙ Ph 800‐424‐1338 ∙ Fax 310‐437‐4448  www.americanhealthcarecapital.com ∙ info@americanhealthcarecapital.com  ©2008 American HealthCare Capital, All Rights Reserved    M&A GLOSSARY OF TERMS    Break-Up Fee: A fee that is payable to the seller or buyer if the other party backs out of a transaction after signing a letter of intent; penalty for causing due diligence without closing the deal. Broker: A licensed agent of a principal that is registered with the state department of real estate. Buyer (Financial): A financial buyer is an equity sponsor that uses institutional and private capital to create a portfolio of operating companies. Buyer (Strategic): A strategic buyer is an actual operating company (usually in the same or a similar business) that makes acquisitions in order to grow. Confidentiality Agreement: A binding contract that holds signatories liable for damages resulting from the disclosure of proprietary information. Covenants: Promises to do or not to do something (e.g. non-compete agreement). Definitive Purchase Agreement/Asset Purchase Agreement: The binding contract that makes the divestiture official, subject to the final change of ownership. Divest, Divestiture: To sell off or the act of selling off an asset. DSO: Days Sales Outstanding; average number of days required to collect accounts receivable. Due Diligence: On site inspection of the clinical, operational, and financial records of the company to allow the buyer to verify the representations made by the seller. Earn Out: Opportunity for a seller to increase total consideration above the enterprise value of the company by staying with the new owner to achieve agreed upon performance objectives in exchange for additional consideration. EBITDA: Earnings Before Interest Taxes Depreciation and Amortization: a universal measure of financial performance calculated by adding interest, depreciation and amortization back to the pretax net profit, commonly used to derive the enterprise value of a company in conjunction with a multiplier. EBITDA, Adjusted (AEBITDA): A normalized EBITDA calculated by adding back reasonable personal and non-recurring expenses subject to explanation and review.


American Healthcare Capital Brochure
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