Glossary · Reading the business
Dilution
In short
A reduction in the value of an asset or the ownership percentage due to the issuance of new shares or a decrease in its intrinsic worth. For a buyer, dilution can impact the effective value of your equity or certain business assets post-acquisition.
What it means in a deal
In the context of business assets like accounts receivable, dilution refers to reductions from returns, allowances, or uncollectible accounts that lower the actual cash received. When evaluating the quality of receivables, you need to factor in historical dilution rates to accurately project cash flow and avoid overpaying.
Related terms
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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