M&A Glossary

BDC

Business Development Bank of Canada — Canada's bank for entrepreneurs, offering acquisition and transition financing.

CSBFP

Canada Small Business Financing Program — a government-backed loan program (via major banks) for equipment, property, and business purchases up to $1.15M.

Data Room

A secure online repository where a seller shares confidential documents with vetted buyers, with access tracking and NDAs.

DSCR

Debt-Service Coverage Ratio — annual cash flow divided by annual debt payments. Lenders typically want 1.25× or more.

Earnout

A portion of the purchase price paid later, contingent on the business hitting agreed performance targets.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortisation — a standard profitability measure for valuing larger businesses.

EBITDA Multiple

The factor applied to EBITDA to estimate enterprise value; varies by industry, growth, and risk.

Ijara

A Sharia-compliant lease-to-own arrangement; the financier leases an asset to the buyer with ownership transferring at term end.

LOI

Letter of Intent — a mostly non-binding document outlining price and key terms before due diligence.

Murabaha

A Sharia-compliant cost-plus sale where the financier buys an asset and resells it to the buyer at a disclosed mark-up, repaid in instalments.

Sales-to-Ask Ratio

The ratio of final sale price to original asking price — a gauge of pricing power and buyer negotiation leverage.

SDE

Seller's Discretionary Earnings — earnings available to a single owner-operator, adding back owner salary and discretionary costs.

Seller Financing

A vendor take-back note where the seller finances part of the purchase price, repaid over time — common in 20-40% of SMB deals.