A requirement of ESOP plans, this formula is proportionate to each participant's compensation, per capita, and points allocation based on compensation and service. Compensation needs to be defined for allocation purposes.

A registered investment advisor (RIA) is a financial professional firm that advises clients on securities investments and may manage their financial portfolios. RIAs are registered with either the Securities and Exchange Commission (SEC) or state securities administrators.

An interest rate swap is a financial contract where one party exchanges future interest payments with another based on a specified principal amount. These involve switching between fixed and floating interest rates to hedge against rate fluctuations or secure favorable terms.

An ESOP distribution policy articulates the timing, form, and method in which participants receive their account balance when they retire, leave the company, or become deceased.

First-loss capital or First-loss reserve is money invested with the highest risk of loss in a deal. It acts like a buffer, absorbing losses before impacting other investors.

Distressed assets, undervalued due to financial difficulties of current owners, present investment opportunities in real estate during economic downturns or specific market conditions.

Convertible preferred stock carries the characteristics of common stock and debt. It provides a stated reasonable dividend and converts to common stock at a specified time.

A micro acquisition involves a larger company purchasing a smaller firm, typically characterized by its smaller scale compared to traditional M&A. These acquisitions are driven by various synergistic motives such as acquiring talent, gaining access to new technologies, etc.

Surety is a type of financial guarantee.

The threshold rate of return is the minimum return that an investor can expect to achieve when investing in a project. It is influenced by the risk of the investment, the liquidity of the investment, and inflation

A Search Fund is an investment pool aspiring entrepreneurs use to raise capital from HWNI's in order to acquire a business (valued between $5 and $30MM) and step in as CEO and operate the company.

An accredited investor is an individual or business entity that's allowed to trade securities that may not be registered with financial authorities by satisfying at least one requirement regarding their income, net worth, asset size, governance status, or professional experience.

SBA’s primary business loan program, provides loan guaranties to lenders that allow them to provide financial help for small businesses. The maximum loan amount is $5MM. Key eligibility factors are based on the business's good or service, credit history, and location.

Any unique EO company considerations in the appraising of company value, e.g., ensuring rigor that would satisfy regulators in an ESOP appraisal

Money that a customer or client owes a company for a good or service purchased on credit. Accounts receivable are current assets for a company and are expected to be paid within a short amount of time.

A stock sale occurs when a buyer purchases the shares of an existing legal entity, effectively buying the company itself.

410(b) coverage testing is a type of compliance test certain qualified retirement plans (e.g., ESOPs) must undergo each year to ensure their plan doesn’t overly favor highly compensated employees (HCEs) over non-highly compensated employees (NHCEs) when it comes to who is eligible to participate in the plan.

The right of redemption allows homeowners who have defaulted on their mortgages to reclaim their property by paying the overdue amount, including interest and penalties, either before or sometimes after a foreclosure sale.

A sub-plan created as part of the overarching succession plan which specifically defines things like key stakeholders to be notified of the succession plan, and sample copy and/or graphics for how the succession plan will be communicated.

The amount of money that cannot be clawed back after the transaction even if there are future problems.

A producer owned co-op for farmers to be able to market their crops together and/or purchase inputs together to reduce costs and eliminate "middle men" in the value chain.

An earnout is a form of deferred payment to the seller that is contingent on certain events occurring post-closing. An earnout can be tied to revenue, EBITDA, or a non-financial metric such as retention of key employees or the issuance of a patent.

The definition of the sales funnel (also known as a revenue funnel or sales process) refers to the buying process that companies lead customers through when purchasing products. The widest part of the funnel represents the phase when potential customers become aware of the product or service, and the funnel eventually narrows to represent the customer purchasing (and repurchasing) the product or service.

Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

The Davis-Bacon Act requires that all contractors and subcontractors performing construction, alteration excess of $2,000 pay their laborers and mechanics not less than the prevailing wage and fringe benefits

A participation loan is an agreement where multiple lenders finance a single loan. The original lender keeps control of the loan but sells shares of it to other banks.

Form 1099-PATR, Taxable Distributions Received From Cooperative, is a form sent to taxpayers to allow them to report distributions received from a cooperative.

A consumer-owned electricity distribution co-op. These power about 56% of the land mass of the United States.

As opposed to proprietary deals, shopped deals are "shopped" out to many competing financial buyers, and are run by investment banks. It provides more leverage for the seller to get the best price.