Codie SanchezFounder @ Contrarian Thinking

7 terms to know to get ahead in business in 2026.

31 Dec 2025 · 1 min

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YouTube clip by Codie Sanchez listing seven essential terms for buying a business: LBO (leveraged buyout), seller financing, working capital, net profit (net income), valuation, EBITDA, and free cash flow (FCF). The speaker ranks them from least to most important and emphasizes free cash flow as the most critical metric for buyers because it represents actual cash available after expenses.

Chapters

The fastest way to look clueless when buying a business. Not knowing these seven terms. Let's start with the least important and get to the number one. 7. LBO stands for leverage Buyout. Translation Using other people's money to buy the business. 6. Seller financing. When the owner becomes the bank and lets you pay them over time, this is how most small business deals actually get done. 5. Working capital. The cash you need day to day to keep the lights on. If you ignore this, even a profitable business can bankrupt you. Net profit AKA Net income. It's the real bottom line, but it's not the whole picture. Valuation. Fancy word for what's this sucker worth? But remember, value on paper doesn't mean cash in your pocket. EBITDA Earnings before interest, taxes, depreciation and amortization. Bankers love it because it's the clean profit number they can compare deals with. And finally, the most important fcf Free cash flow. This is king. It's what's left after everything is paid. Forget the accounting tricks. This is the money that actually lands in your pocket pocket. Know these seven and you won't just sound like you're in the game, you'll actually be a buyer that knows how to win it.