Glossary

Basket in Escrow & Setoffs

Chris Labs

The mininum claim amount that is necessary for you (as the buyer) to be entitled to funds from the escrow account. The basket’s purpose is to eliminate disputes over very small claim amounts. As a buyer, however, you want it to be as small as possible so that you can have flexibility on the kinds of claims that come out of the escrow. On a 5M$ acquisition, the basket might be 25k or 50k. *When the total claims exceed that threshold, then the escrow account pays from the first dollar of claims. -Buying a small business, p.266 Continue reading Basket in Escrow & Setoffs

Glossary

Survival period in Escrow & Setoffs

Chris Labs

The end date of the period (following the sale of a business) during which claims can be made. After the survival period, any undisputed portion of the escrow is released to the seller and no new claims can be made. The survival period is usually at least long enough for the financial statements to be completed for the year in which the acquisition occured. -Buying a small business, p.266 Continue reading Survival period in Escrow & Setoffs

Happiness

The key to experience pleasure

Chris Labs

When we consume, we experience pleasure. As long as the things we consume are novel. But as we adapt, the novelty wears off and pleasure becomes comfort. This is called the hedonic treadmill or satisfaction treadmill. It’s a thrill to drive your new car for the first few weeks; after that, it’s just comfortable. It sure beats the old car, but it isn’t much of a kick. Faced with this inevitable disappointment, we can either be driven to pursue novelty. These new commodities will give us pleasure until repeated exposure. Expectations of having something new are not matched by reality, … Continue reading The key to experience pleasure