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I recently visited St Petersburg, Russia, and I was reminded how disorienting it can feel when you don't know the language.

I was standing in the customs line waiting to enter the country and I suddenly had a scary thought: What if I cannot understand the officer's questions and I end up in a Siberian gulag?

The same feeling can come over you when you are selling your business and all of the people around you are using a language you don't understand. Your accountant, lawyer and mergers & acquisitions adviser will throw out a number of buzzwords that may not be familiar.

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Here's a cheat sheet on some of the most common:

Downstroke

The initial sunk money in an investment. For example, if someone offers to buy your company for $1 million cash up front and a further $500,000 in three years if you meet the profit milestones the acquirer hopes you will reach, then the "downstroke" is the initial $1 million the acquirer paid.

Earn out

In the example above, the $500,000 is the "earn out" you stand to get if you meet the profit thresholds, or whatever goals are agreed to, in the future.

A turn

A business is typically bought on a multiple of earnings before interests depreciation and amortization (EBITDA) and "a turn" relates to the multiple the buyer is willing to pay for your business. For example, a buyer might offer to pay four times EBITDA and you might say "I need another half turn," which would be the equivalent of saying you are looking for four-and-a-half-times earnings.

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Hair

"Hair" on a deal is often used to describe a business that has some negative aspects. For example, if you're trying to sell your company and you have one customer that generates 50 per cent of your revenue, you're being sued by a former employee and your customer records are spread in three disparate databases, buyers (or their advisers) may say your company has "a lot of hair on it."

Special to the Globe and Mail

John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell . Throughout his career as an entrepreneur, Mr. Warrillow has started and exited four companies. Most recently he transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which he sold to The Corporate Executive Board in 2008. He is the author of Drilling for Gold and in 2008 was recognized by BtoB Magazine's "Who's Who" list as one of America's most influential business-to-business marketers.

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