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Simple English definitions for legal terms
net proceeds
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A quick definition of net proceeds:
Net proceeds refer to the amount of money received from a sale or transaction after all the costs and expenses have been deducted. It is the money left over after paying for things like commissions, fees, and other expenses. For example, if you sell a toy for $10 but had to pay $2 for shipping and $1 for packaging, your net proceeds would be $7. Net proceeds are important because they show how much money you actually made from a sale or transaction.
A more thorough explanation:
Definition: Net proceeds refer to the amount of money received from a transaction after deducting the costs associated with the transaction, such as expenses and commissions.
Examples:
- If you sell a car for $10,000 and the transaction costs, such as advertising and sales commissions, amount to $1,000, then the net proceeds from the sale would be $9,000.
- If a company issues shares of stock and raises $1 million in capital, but incurs $100,000 in underwriting fees and other expenses, then the net proceeds from the stock offering would be $900,000.
These examples illustrate how net proceeds are calculated by subtracting the costs of a transaction from the total amount received. In both cases, the net proceeds are the actual amount of money that the seller or issuer receives after all expenses are taken into account.