Search Fund Jargon Translator

Clear, plain-English definitions of ETA and dealmaking terms, with practical notes and examples.

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Debt Service Coverage Ratio (DSCR)

A measure of the cash flow available to pay current debt obligations. It is calculated by dividing the company's EBITDA or operating cash flow by its total debt service (interest + principal).

Due Diligence

The comprehensive investigation and audit of a business that a buyer undertakes before completing an acquisition to confirm all relevant facts and financial information.

Distribution Waterfall

A method for distributing investment returns among partners in a fund, where cash flows are allocated to different tiers of stakeholders in a specific order of priority.

Data Room

A secure online repository where a seller stores and shares confidential documents with prospective buyers during the due diligence process.
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