Glossary of Terms on The Grid

A leveraged buyout (LBO) is when one company acquires another using mostly borrowed money, often secured by the assets of both companies.

A social enterprise is defined as a business with specific social objectives that serve its primary purpose. Social enterprises seek to maximize profits while maximizing benefits to society and the environment, and the profits are principally used to fund social programs.

A golden share is a special type of share that grants its holder veto power over changes to a company's charter, ensuring control over critical decisions. This share typically holds at least 51% of voting rights and is issued by both private firms and government entities.

EBSA ensures the security of the retirement, health, and other job-based benefits of America's workers and their families; they develop effective regulations, assisting and educating workers, plan sponsors, fiduciaries, and service providers, and vigorously enforce the law.

An SOP is a set of instructions used to train employees to complete a task; SOP's are the foundation of building a business that can thrive without the creator of those procedures, which gives those individuals more freedom to work strategically.

Blended finance lets investors choose different risk tolerances while all participating in the same project. Often used in real estate transactions, it is also proving to be an effective way to get capital to critical, but hard-to-fund projects.

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.

The fixed asset turnover ratio measures how effectively a company uses its fixed assets, like property and equipment, to generate sales. It's calculated by dividing net sales by the average balance of fixed assets.

QV allows participants to allocate credits among choices according to their preferences, with votes calculated quadratically. This means that more passionate preferences are weighted higher, which can protect minority interests and balance power dynamics within communities.

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.

Fractional ownership allows investors to purchase a share of an asset rather than the entire cost, making it accessible for those with limited capital or seeking diversification.

An ESOP that operates within a 401(k). Companies match employee contributions with stock rather than cash. KSOPs are considered defined-benefit plans, as companies that offer them can reduce the administrative expenses of operating separate ESOPs and 401(k) plans.

An LP is a business structure involving at least one general partner with unlimited liability who manages the business and one or more limited partners who invest but have liability only up to their investment.

In an ESOP or EOT transaction, the external loan is between the company and the selling shareholder; also, between the company and a financial lender, such as a bank, in externally financed transactions. The external loan is often reloaned as an internal loan to the Trust.

In an ESOP or EOT transaction, the internal loan will be between the Trustee, on behalf of the Trust, and the company, with a loan provided by a third party such as a bank (as an external loan). This is a "reloan," because the bank would not lend directly to the ESOP.

The many things that set EO companies apart from non-EO, driving better results for people, planet, and profit. This can include longer tenure/loyalty with customers, and employees, more wealth creation for employees, reduced carbon footprint, and more.

An array of programs at governments, certifying agencies, and other entities that support selected businesses to benefit a disadvantaged group of people, including businesses owned by racial minorities, women, veterans, disabled individuals, those in a disadvantaged area, etc.

The inventory turnover ratio gauges a company's inventory management efficiency by showing how often it sells and replenishes inventory annually. It's calculated by dividing the cost of goods sold by the average inventory value, providing insights into operational efficiency.

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 prospectus is a formal document required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering to the public. A prospectus is filed for offerings of stocks, bonds, and mutual funds.

A business broker facilitates the sale of a business by representing the buyer or seller.

An autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise

Regulation Crowdfunding enables eligible companies to offer and sell securities through crowdfunding.

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 EO transaction in which < 100% of the company stock is sold to employee owners, whether through installation of a trust, or a new worker-owned co-op. This has strategic and taxation considerations.

Est. 1953, SBA is the only cabinet-level federal agency fully dedicated to small business and provides counseling, capital, and contracting expertise as the nation’s only go-to resource and voice for small businesses.

A US Government department designed to foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.

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

When employees are given an option, and they decide to, laterally transfer 401k assets to finance the ESOP transition. This results in more cash made available to the selling owner at the time of closing.

The first certification for small business exit planners, specifically tailored to the needs of employee ownership sales. Created/certified by Project Equity.