Page 105 - M & A Disputes

from which the loss directly results. When the loss is not the natural and probable effect
of the wrongful conduct, the loss is remote, Cf. direct loss. (BLD)

Constructive total loss.1. Such serious damage to the insured property that the cost of repairs
would exceed the value of the thing repaired. See total loss. (BLD)

Direct loss. A loss that results immediately and proximately from an event. Cf. consequential
loss. (BLD)

Economic loss. A monetary loss such as lost wages or lost profits. The term usu. refers to a
type of damages recoverable in a lawsuit. For example, in a products-liability suit, eco-
nomic loss includes the cost of repair or replacement of defective property, as well as
commercial loss for the property’s inadequate value and consequent loss of profits or use.
(BLD)

Extraordinary loss. A loss that is both unusual and infrequent, such as a loss resulting from a
natural disaster. (BLD)

Net operating loss. The excess of operating expenses over revenues, the amount of which
can be deducted from gross income if other deductions do not exceed gross income.
(BLD)

Ordinary loss. A loss incurred from the sale or exchange of an item that is used in a trade or
business. (BLD)

Out-of-pocket loss. The difference between the value of what the buyer paid and the market
value of what was received in return. (BLD)

Paper loss. A loss that is realized only by selling something (such as a security) that has de-
creased in market value. (BLD)

Total loss. The complete destruction of insured property so that nothing of value remains and
the subject matter no longer exists in its original form. Generally, a loss is total if, after
the damage occurs, no substantial remnant remains standing that a reasonably prudent un-
insured owner, desiring to rebuild, would use as a basis to restore the property to its orig-
inal condition. Cf. constructive total loss. (BLD)

Majority control. The degree of control provided by a majority position. (Practitioner — Appen-
dix B)

Majority interest. An ownership interest greater than 50% of the voting interest in a business enter-
prise. (Practitioner — Appendix B)

Marketability. The ability to quickly convert property to cash at minimal cost. (Practitioner —
Appendix B)

Marketability discount. See discount for lack of marketability. (Practitioner — Appendix B)

Market capitalization of equity. The share price of a publicly traded stock multiplied by the num-
ber of shares outstanding. (Practitioner — Appendix B)

© 2020 Association of International Certified Professional Accountants 103