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What is an Earnout?

An earnout is a provision in a purchase agreement. It can also be a separate agreement that's part of a group of transaction documents in a merger or acquisition. It makes part of the purchase price dependent on the startup company reaching certain milestones within a specified time. When the company reaches the milestones, the seller gets the earnout in stocks or cash. Earnouts are popular among private equity investors who might not be able to keep a business running on their own after a purchase. They usually defer between 10 and 50 percent of the purchase price.

Reverse Earnout: What is it?

A reverse earnout pays the buyer an amount or percentage of a per

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Debt Financing: What Is it?

Debt financing is when a company raises money by taking out a loan and then repays that loan over time with interest. This is also known as borrowing on credit . It can come from selling bonds, bills, or notes to lending institutions, or from private investors who are not looking to receive equity in your business.

It's good to be aware of the fact that banks often shy away from small businesses that are experiencing rapid sales growth, a temporary decline or a seasonal slump. They are not completely stable.

Debt Financing Versus Equity Financing

Debt financing is a loan that must be repaid, while

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Statement of Work: What Is It?

A statement of work (SOW) is a document that lists all the work a supplier will do during a project. It will define the amount of work, the expected quality of the job performance, and the timeframe for completion.

A well-written SOW will help both parties understand the parameters of a successful project. A poorly worded SOW could lead to conflict. The parties may argue over unclear expectations and the definition of good work.

To avoid such arguments, a well-written SOW should include:

• A list of expected products and services
• A list of tasks leading to the product's creation
• Specifics regarding who will handle each of the listed tasks
• Due dates

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Updated July 6, 2020:

A Guide on How to Open a Food Truck in California

With lower overhead costs and greater mobility, a food truck can be an exciting opportunity for budding entrepreneurs. However, you must comply with the licensing procedures and food-service laws of each location in which you will be operating.  These laws and regulations can vary between locations, so remember to research your local laws.  This guide sets forth the necessary steps for starting a food truck in California.

1. Create a business plan

Given the unique challenges of a food tr

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501(c): What is it?

501(c) is a section of the federal regulations which list the type of companies that can be exempt from paying taxes according to the Internal Revenue Service (IRS). These types of companies are referred to as 501(c)s.

Types of 501(c)s

There are 27 types of organizations that can file for 501(c) status. Many of these are not applicable to the average business. The organizations seeking tax exemptions are usually:

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