Glossary
Valuation, equity bridge & funding glossary
This glossary explains the core financial terms used across the ValuSuite tools — ValuBase, ValuBridge and ValuFund — so that business owners, advisers, buyers and deal professionals can interpret each figure with confidence. The three tools follow the natural arc of an SME transaction: ValuBase estimates an Indicative Enterprise Value from maintainable earnings and a market multiple; ValuBridge converts that Enterprise Value into an Indicative Equity Value by adjusting for working capital, cash, debt and debt-like items; and ValuFund turns the resulting equity figure and its funding structure into a Lender-oriented Funding Proposal.
The definitions below clarify how each term is used in that workflow, where it appears in the tools, and why it matters for a transaction. They are provided for information only and do not constitute accounting, tax, legal or investment advice. Where a term has a specific meaning within a ValuSuite tool, that meaning is noted alongside the general definition. Figures produced by the tools are indicative: they are designed to support discussion, negotiation and preparation, not to replace a formal valuation, transaction documentation or a lender's independent credit assessment.
Valuation terms
Valuation
Reported EBITDA
ValuBaseEarnings before interest, tax, depreciation and amortisation as shown in the business's financial statements, before any normalising adjustments. Reported EBITDA is the raw starting figure that ValuBase normalises to derive maintainable EBITDA.
Maintainable EBITDA
ValuBaseEarnings before interest, tax, depreciation and amortisation, normalised to remove non-recurring, owner-related and one-off items. Maintainable EBITDA represents the sustainable earnings base a business is expected to generate, and is the starting point for an Indicative Enterprise Value.
Enterprise Value (EV)
ValuBaseThe total value of a business's operating assets, representing the value to all providers of capital (debt and equity). ValuBase estimates an Indicative Enterprise Value by applying a market-calibrated multiple to maintainable EBITDA and adjusting for business-specific quality and risk factors.
Market Multiple
ValuBaseA valuation benchmark (for example a multiple of EBITDA) derived from comparable transactions, listed companies or sector data. ValuBase calibrates the multiple to the business and its sector rather than applying a single generic figure.
Normalisation / Add-backs
ValuBaseAdjustments to reported EBITDA that add back exceptional, discretionary or non-recurring costs to derive maintainable earnings. Typical add-backs include one-off legal fees, redundant owner remuneration and extraordinary write-offs.
Quality & Risk Adjustments
ValuBaseBusiness-specific factors applied to the market multiple to reflect customer concentration, management depth, market position, growth outlook and operational risk. These adjustments move the multiple up or down from the sector benchmark.
Transaction terms
Transaction
Equity Value
ValuBridgeThe value attributable to shareholders, derived by moving from Enterprise Value to the equity holders' claim. ValuBridge produces an Indicative Equity Value by adjusting Enterprise Value for working capital, cash, debt and debt-like items and non-operating assets.
Working Capital Normalisation / Adjustment
ValuBridgeComparing actual working capital with a target or normalised level to identify a surplus or deficit at completion. Where actual working capital exceeds the target, the adjustment increases indicative Equity Value; where it falls below target, the adjustment reduces it, subject to the agreed transaction mechanics.
Net Debt / Net Cash
ValuBridgeThe net of debt and debt-like items minus cash and cash equivalents. Net debt reduces Equity Value; net cash increases it. ValuBridge shows the net position as part of the Enterprise Value to Equity Value bridge.
Minimum Operating Cash
ValuBridgeThe cash a business needs to run its day-to-day operations, which is not treated as surplus. Cash above this minimum is credited in the bridge; the minimum itself remains part of operating working capital.
Cash Credited
ValuBridgeCash and cash equivalents added to Enterprise Value in the bridge to move toward Equity Value. ValuBridge credits cash after allowing for a minimum operating cash level, so only surplus cash is added.
Debt & Debt-like Items
ValuBridgeClaims that rank ahead of equity and are deducted from Enterprise Value in the bridge. They include bank debt, hire purchase, finance leases, accrued liabilities, deferred consideration and similar obligations.
Non-operating Assets
ValuBridgeAssets not required for the core day-to-day operations of the business, such as surplus property, investments or other assets held outside the operating business. These may be added separately in the Enterprise Value to Equity Value bridge where appropriate.
Funding terms
Funding
CFADS
ValuFundCash Flow Available for Debt Service: the cash a business generates that is available to meet interest and principal repayments after operating costs, tax and reinvestment. CFADS, rather than headline profit, is the basis for assessing debt capacity.
Senior Debt Service
ValuFundThe scheduled interest and principal repayments due on senior debt over a period. ValuFund measures the cash available against senior debt service using the Senior DSCR.
DSCR / Senior DSCR
ValuFundA measure of cash available to meet scheduled debt service. In ValuFund, Senior DSCR is calculated as CFADS divided by Senior Debt Service. A ratio above 1.0x indicates CFADS exceeds scheduled senior debt service; lenders typically assess the level of headroom and its resilience under downside scenarios.
Sources & Uses
ValuFundA summary of where funding for a transaction comes from (sources) and how it is applied (uses), including equity, senior debt, deferred consideration and transaction costs. ValuFund sets out sources and uses as part of the funding proposal.
Senior Debt
ValuFundDebt that ranks first in priority for repayment and is usually secured against the business's assets. Senior debt generally carries the lowest cost of borrowing but the strongest covenants and security package.
Vendor / Deferred Consideration
ValuFundPortion of the purchase price paid to the seller over time, often subject to performance or other conditions. It can reduce the senior debt required and is treated as a debt-like obligation where relevant.
Downside Sensitivity
ValuFundTesting how key figures — particularly debt-service coverage — hold up under stressed assumptions such as lower revenue or margins. ValuFund includes downside sensitivity so a lender can see resilience, not just the base case.
Funding Proposal
ValuFundA structured, lender-oriented document that sets out the transaction, the business, management, forecast performance, debt service and the proposed funding structure. ValuFund assembles the elements a lender needs to assess a transaction.