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Many people have been asking me about some various acronyms they have seen while browsing the business for sale websites, the newspapers and business for sale magazines.
They see terms like WIWO, SAV, TOL, NDA and wonder… What Does It Mean?
Today I’d like to explain 4 of the most common acronyms you’ll see in business for sale advertisements and what they actually mean.
- What Does WIWO Mean? [0:56]
- What Does SAV Mean? [1:14]
- What Does TOL Mean? [2:48]
- What Does NDA Mean? [3:17]
W.I.W.O = Walk In Walk Out [0:56]
One of the most commonly used and least understood acronym is WIWO, so what Does WIWO Mean?
W.I.W.O means Walk In Walk Out. And to understand what Walk In Walk Out really means you need to understand Stock At Value first.
Often people think WIWO means there is no hand over, and they would be correct however it’s actually referring to that when you walk in to the business, the other owner completely walks out and there’s no time taken, and there’s no stock take made.
You see sometimes when you buy a business you will buy on a certain price plus stock at value, which would mean when you come in, you need to take a stock take and actually make sure that if you’ve paid $50,000 for stock at value that you have $50,000 worth of stock.
In a walk out walk in walk out situation, they’re saying look the business is $500,000 WIWO. There’s no stock take to check how much value there actually is of stock to then readjust the price, there’s very little – if any – handover training from the previous owner. You’re going walk in and the current owner is going to walk out.
S.A.V = Stock At Value [1:14]
Another common acronym which you may have seen which had you asking “What Does It Mean?”… is SAV and that stands for stock at value. After reading about WIWO you should feel that Stock at Value is a little more self explanatory now.
If you pay a certain price you’ll sometimes see it’s like lets say $100,000 plus stock at value. You do need to be careful with this because you might think the business is only $100,000 – $150,000 to purchase but because they have been slow at moving stock or they way over invested in stock they could have half a million dollars worth of stock in the purchase, bringing their asking price closer to $600,000 instead.
T.O.L = Take Over Lease [2:48]
This acronym is not as commonly seen, but can be used in business for sale documents and even email communication with a business broker, accountant or real estate agent so it is important you understand it and that is TOL.
What does TOL mean? TOL stands for take over lease. That means that the sale of the business requires you to take over the lease, either as part of the purchase or as being the only element of the purchase.
What you’ll sometimes find is businesses who are struggling with rent payments, are willing to pass on their business just for taking over the lease and while its less likely to be advertised when it is this is an acronym you’ll come across.
N.D.A = Non-Disclosure Agreement [3:17]
A term that you may already be aware of, but if you’re not, it’s an important term to know – that is an NDA.
Now an NDA stands for Non-Disclosure Agreement and essentially whenever you inquire to buy a business privately or through a broker, the seller will usually get you to sign an NDA.
This is a document designed to protect both parties although never assume be sure to read it carefully as you want to make it is a mutual non-disclosure agreement.
Once signed both parties are agreeing that they won’t share any private and confidential information you share with them, and you won’t share any private and confidential information that they share with you.
It’s to protect both the buyer and the seller, like when the seller is disclosing a lot of financial information, and more often than not the buyer finds the business is not in as good shape as they’d thought, now obviously the seller doesn’t want their competitors to necessarily know this and have it broadcast to the world. This is why the NDA is used so the buyer agrees that they aren’t going to call up the competitors and tell them the situation that the business is in, they’re only going to share the information with relevant people as outlined in the non-disclosure agreement.
To learn more about terminology like this and how to find good businesses, negotiate the best price, avoid getting ripped off and access templates and checklists including a Non Disclosure Agreement, check out the Buying A Business Homestudy Program
Carl is the Author of Red Means Go! and founder of Business Builders Academy. He invests in and runs a number of businesses, and regularly teaches business skills through online training and live speaking events.
