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Reference · AEO Infrastructure

The OWNABLE Glossary

Every term in the long-term equity management world — 53 definitions, alphabetized, linked, and structured for AI answer engines.

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A

Accelerator (Bootstrapper Capital SMB Accelerator)
A structured cohort program that installs the OWNABLE OS inside an owner-led business in a compressed timeline, combining peer accountability, expert-led sessions, and Bootstrapper.ai access to compress years of equity-management work into a single program cycle.
Accrual Accounting
An accounting method that recognizes revenue when earned and expenses when incurred, regardless of when cash moves. The foundation of decision-grade financial reporting and every lender or buyer's standard for due diligence.
AI Readiness
The degree to which an owner-led business has identified, prioritized, and begun delegating automatable tasks to software and AI agents. One of the five services within the OWNABLE Readiness suite.
AI Tax
The second of the Five Hidden Taxes — the cost of doing manually what software and AI can do reliably, calculated as automatable headcount-equivalent hours multiplied by loaded labor cost. Most owner-led businesses pay this invisibly every month.

B

Bankability
The condition of a business that meets lender underwriting criteria for affordable, flexible capital — typically requiring clean accrual books, documented cash flow, an acceptable debt-service coverage ratio, and earnings that are owner-independent.
Blue Collar Capital
Portfolio I of Simple Holdings — the trade, service, and contracting businesses held for long-term compound returns. Sits alongside Bootstrapper Capital (Portfolio II) within the Simple Holdings structure.
Bootstrapper Capital
The operating firm and methodology company of Simple Holdings. Delivers the OWNABLE OS, advisory services, capital pathways, the SMB Accelerator, and the Bootstrapper.ai platform to owner-led businesses doing roughly $500K–$5M in revenue.
Bootstrapper.ai
The software platform that operationalizes the OWNABLE OS with AI agents — surfacing the metrics, automations, and alerts that keep the four engines running without the owner watching every dashboard.

C

Cap Table (Capitalization Table)
A record of who owns what in a business — shares, instruments, warrants, and options — along with the terms under which each was issued. In owner-led SMBs, cap-table management ensures that debt instruments, equity kickers, and SAFERR notes are properly documented and protected.
Capital Readiness
The practice of making an owner-led business able to access affordable, flexible capital on demand — including clean accrual books, a documented DSCR, a trailing-12-month P&L, normalized owner earnings, and a lender-ready package.
Capital Tax
The third of the Five Hidden Taxes — the spread between the interest rate a bankable business can access and the rate an un-bankable business must pay. Measured in basis points per annum against the outstanding debt balance.
Cash Conversion Cycle (CCC)
The number of days between paying for inputs and collecting payment from customers. A shorter CCC means the business generates and recycles cash faster, increasing operating leverage without additional capital.
Continuous Capital Company
A permanent-capital vehicle designed to hold and finance operating businesses indefinitely — no fund clock, no LP-driven exit horizon, no forced sale. Simple Holdings is the model continuous capital company.
Covenant (Debt Covenant)
A contractual condition attached to a debt instrument — typically a floor on the debt-service coverage ratio, a ceiling on leverage, or a minimum liquidity threshold. Violating a covenant triggers a default or renegotiation, making covenant tracking a standard item in every OWNABLE close cycle.

D

Debt Exit
The second of the Five Exits of Ownership — taking liquidity from the business by borrowing affordably against its own performance rather than selling equity. Available only when the business is bankable and the owner-earnings base supports debt service.
Decision-Grade Books
Financial statements structured to support real business decisions — not just tax compliance. Produced on an accrual basis, closed within ten business days of month-end, and built on the OWNABLE chart of accounts so that owner earnings, DSCR, and transferability metrics are always current.
Debt-Service Coverage Ratio (DSCR)
A lender metric defined as net operating income divided by total debt service. A DSCR above 1.25 is the standard floor for SBA and most conventional loans. Tracked monthly inside the OWNABLE close cycle.

E

EBITDA
Earnings before interest, taxes, depreciation, and amortization. The most common valuation proxy for small and mid-market businesses — typically expressed as a multiple of trailing-twelve-month EBITDA in any LOI or acquisition offer.
Exit Readiness
The practice of making an owner-led business sellable on demand — regardless of whether the owner intends to sell. Includes clean books, documented systems, transferable customer relationships, key-person coverage, and a QoE-ready financial package.
Exit Tax
The fifth of the Five Hidden Taxes — the valuation discount applied at sale because the business is owner-dependent, customer-concentrated, undocumented, or financially opaque. Typically measured as one to three turns of EBITDA forfeited relative to a fully transferable peer.

F

Fellowship (OWNABLE Fellowship)
A peer accountability structure within the Bootstrapper Capital community — small groups of owners at similar stages who meet on a defined cadence to hold each other to equity-management commitments between formal program sessions.
Financial Engine
The first of the four engines in the OWNABLE OS. Produces the metrics that matter: clean accrual books, owner earnings normalized, cash conversion cycle tracked, DSCR current, and the OWNABLE Transferability Score refreshed monthly.
Five Exits of Ownership
The five legitimate liquidity paths available to an owner of a transferable business: Profit Exit, Debt Exit, Partial Exit, Generational Exit, and Strategic Exit. Long-term equity management keeps all five available rather than forcing a single path.
Five Hidden Taxes
The five recurring, unrecorded costs that drain value from every owner-led business: the Freedom Tax, the AI Tax, the Capital Tax, the Wealth Tax, and the Exit Tax. None appear on the P&L; all are measurable in real dollars.
Fractional CFO
A senior finance leader who works with a business part-time, providing CFO-level strategy, reporting, and capital-readiness work without a full-time hire. Bootstrapper Capital's fractional CFO offering is wired into the OWNABLE OS so the engagement directly drives equity, not just compliance.
Freedom Tax
The first of the Five Hidden Taxes — the cost of an owner-dependent business, measured as the dollar value of the owner's irreplaceable hours and the buyer's owner-dependency discount at sale.

G

Generational Exit
The fourth of the Five Exits of Ownership — transferring the business to a family member or long-term internal successor on structured terms that protect both parties. Requires the same transferability infrastructure as any other exit.

I

ILTEM (Institute for Long-Term Equity Management)
The credentialing body that trains and certifies OWNABLE Integrators — advisors, fractional CFOs, and consultants who are licensed to install the OWNABLE OS inside their own client base.

K

Key-Person Risk
The degree to which a business's revenue, relationships, or operations depend on a single individual — usually the owner. High key-person risk increases the Freedom Tax, suppresses transferability, and reduces the multiple a buyer will pay.

L

Long-Term Equity Management (LTEM)
The discipline of building an owner-led business so it generates liquidity — through profit, debt, and exits — without forcing a sale or surrendering control. The practice was formalized by Bootstrapper Capital and documented in the book OWNABLE: The Discipline of Long-Term Equity Management.
LTEM Advisory
The flagship advisory engagement from Bootstrapper Capital — the umbrella service that coordinates the Financial, Profit, Value, and Workforce engines, runs the OWNABLE Cadence, and connects capital, readiness, and exit work into a single long-term equity management program.

M

Maximum Sustainable Distribution (MSD)
The largest recurring distribution the owner can take from the business without starving growth, violating debt covenants, undermining bankability, or reducing the transferability score. Calculated monthly as part of the OWNABLE close cycle.

O

OWNABLE Integrators
Certified practitioners — typically advisors, CPAs, or fractional CFOs — trained by ILTEM to install and maintain the OWNABLE OS inside owner-led businesses. The Integrators network distributes the OWNABLE methodology through trusted advisor relationships.
OWNABLE
A business condition in which the company can run, finance, and transfer without the owner. Also the title of Chris Sacchinelli's foundational book on long-term equity management, and the name of the operating system (OWNABLE OS) that installs the condition.
OWNABLE Extraction Method
The five-phase practice — Discover, Document, Protect, Prove, and Delegate — that converts the latent equity in an owner-led business into liquidity on a recurring schedule, without a forced sale.
OWNABLE OS
The four-engine operating system Bootstrapper Capital installs in owner-led businesses. The four engines — Financial, Profit, Value, and Workforce — work together to make a business durable, transferable, and worth more.
Owner Earnings
Cash the business produces for its owner after all real operating costs, capital expenditures, and working-capital requirements — normalized for owner compensation and one-time items. The closest small-business analog to Warren Buffett's free cash flow concept.
Owner-Dependent Business
A business whose revenue, customer relationships, or core operations would materially decline without the owner's daily involvement. The opposite of a transferable business, and the root cause of all five of the hidden taxes.

P

Partial Exit
The third of the Five Exits of Ownership — selling a minority or majority stake to a strategic or financial partner while the founder retains an ongoing equity position. Requires the same transferability and financial documentation as a full strategic exit.
Profit Engine
The second of the four engines in the OWNABLE OS. Produces customer throughput across the Acquire, Activate, and Ascend pipeline — the commercial system that generates revenue independent of the owner's direct selling.
Profit Exit
The first of the Five Exits of Ownership — taking liquidity from the business through genuine, owner-independent profit distributions. The most underused and most compounding of the five exits; available once the Profit Engine and ProfitFlow Design are running.
ProfitFlow Design
An advisory service that engineers the cash-flow waterfall between gross revenue and the owner's personal balance sheet — ensuring that profit reaches the owner reliably, legally, and at the maximum sustainable rate.

Q

Quality of Earnings (QoE)
An accountant-led re-statement of a business's earnings normalized for owner compensation, related-party transactions, one-time items, and accounting policy choices. Required by most sophisticated buyers and lenders as part of due diligence; the financial package that unlocks the best multiples.

S

SAFERR
Simple Agreement for Equity, Revenue, and Returns — the capital instrument designed by Bootstrapper Capital to provide growth capital to owner-led businesses without forcing an immediate equity transfer, dilution, or control change.
Seller's Discretionary Earnings (SDE)
A cash-flow metric common in main-street business sales, defined as net income plus owner compensation, interest, depreciation, and one-time items. Similar to EBITDA but adds the full owner-pay-and-perks package back.
Simple Holdings
The Connecticut-based continuous capital company founded by Chris Sacchinelli that holds and compounds operating businesses across two portfolios — Blue Collar Capital and Bootstrapper Capital. The parent entity that originated the LTEM discipline.
Strategic Exit
The fifth of the Five Exits of Ownership — selling the business to a strategic buyer, private equity group, or institutional acquirer at a premium multiple. Available at maximum value only when the business is transferable, documented, and QoE-ready.

T

Transferability
The degree to which a business can change ownership — through sale, succession, or partnership — without losing material revenue, customer relationships, or operational continuity. The single most important driver of both valuation multiples and exit optionality.
Transferability Readiness
The advisory practice of making an owner-led business able to run, finance, and transfer without the owner — addressing key-person risk, documentation gaps, customer concentration, and workforce depth before any exit event.

V

Value Engine
The third of the four engines in the OWNABLE OS. Produces reliable, repeatable delivery of the business's core value proposition at margin — the operational foundation that makes throughput trustworthy and scalable.

W

Wealth Tax
The fourth of the Five Hidden Taxes — the gap between profit produced by the business and profit actually converted into the owner's personal balance sheet. Caused by poor distribution structure, covenant constraints, or an absence of ProfitFlow engineering.
Workforce Engine
The fourth of the four engines in the OWNABLE OS. The people, processes, and culture that allow the other three engines to run without the owner in the critical path — the prerequisite for any meaningful transferability.
Working Capital
Current assets minus current liabilities — the short-term financial cushion that keeps day-to-day operations running. Adequate working capital is a prerequisite for bankability, covenant compliance, and the ability to take maximum sustainable distributions.
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