Cash Basis Accounting
This is a method of accounting wherein income and expenses are recognized when the business receives the income or pays an expense.
Our M&A Glossary is a valuable resource for anyone seeking to understand the world of corporate transactions, providing clear definitions and explanations of key terms to guide both industry veterans and newcomers through the complexities of mergers, acquisitions, and related topics.
The glossary is organized alphabetically, allowing you to search for a specific term directly in the search field and access its definition instantly.
This is a method of accounting wherein income and expenses are recognized when the business receives the income or pays an expense.
This is the portion of the purchase price that is given to the target in the form of cash.
This is a metric that expresses the time (in days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
This is the cash that is generated over a period of time by a business enterprise. There are many types of cash flow.
This is a type of deal structure where the selling price of a company is calculated without taking into account any cash or debt held by the company.
Change management in post-M&A integration involves managing the transition of people, processes, and systems to achieve the desired state after the merger or acquisition.
This is a provision in a contract that gives a party certain rights in the event that the other party is taken over by a third party.
These are provisions in a contract that specify which jurisdiction’s laws will be used to interpret the contract.
The circular economy is an economic model that aims to minimize waste, maximize resource efficiency, and promote sustainable production and consumption. Investing in circular economy initiatives supports the transition to a more sustainable and regenerative economy.
This is a corporation whose stock is owned by one or a few shareholders and is operated by this person or close knit group.
Closing is the final step in the M&A process where ownership of the target company is officially transferred to the buyer. All necessary documents are signed and payments are made.
These are various mechanisms used to determine the final purchase price in an M&A transaction.
These are conditions that must be met for a transaction to close.
Cloud computing is the delivery of computing services, including servers, storage, databases, software, and analytics, over the internet. It enables businesses to access and utilize scalable and flexible IT resources without the need for on-premises infrastructure.
This is property pledged by a borrower to guarantee payment of a debt.
A communication plan in post-M&A integration outlines how information about the integration process will be communicated to stakeholders, including employees, customers, and investors.
This is one of the less ideal reasons for a merger. It occurs when management compensation is tied to company performance benchmarked to other companies, so an increase in the size of the company often means an increase in salary for management.
Compliance risk is the risk of non-compliance with laws, regulations, or industry standards, which can lead to legal penalties, reputational damage, or business disruptions. It involves establishing and maintaining a culture of compliance within an organization.
These are conditions that must be satisfied before a party is obligated to proceed with a contract or agreement.
These are obligations that must be fulfilled in order to legally require the other party to close the transaction.
This is a document containing a detailed analysis and narrative description of a company and its future prospects.
This is a document signed by potential buyers that requires them to keep the information contained in the CIM, other evaluation materials and all discussions completely confidential.
This is a merger of companies with seemingly unrelated businesses.
Consolidation is a deal structure where two or more companies combine to form a new entity. It can occur through various structures, including mergers and acquisitions.
This is a potential obligation that arises from past events and will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the business.
A counteroffer is a response to an initial offer or proposal made in a negotiation. It suggests modified terms, conditions, or pricing, initiating further negotiation and potential agreement.
M&A Basics
This is an agreement between buyer and seller that restricts each party from taking certain actions, particularly during the Letter of Intent period and prior to closing.
These are promises made by the parties in an M&A agreement to do or not do certain things.
A cross-border transaction is a deal or investment involving companies from different countries. It can include mergers, acquisitions, joint ventures, or other business arrangements that span national borders, requiring considerations of international laws, regulations, and cultural differences.
Cultural integration involves merging the corporate cultures of two companies after an M&A deal. It’s a critical aspect of post-merger integration that can impact employee morale and productivity.
Cybersecurity refers to the practice of protecting computer systems, networks, and data from digital attacks, theft, or damage. It involves implementing measures to prevent unauthorized access, data breaches, and other cyber threats.
Cybersecurity risk is the risk of unauthorized access, data breaches, system failures, or other cyber threats that could result in financial loss, data compromise, or damage to reputation. It involves implementing measures to protect against such risks.
Day One readiness refers to the state of being fully prepared to operate as a combined entity on the first official day after the M&A deal closes.
This is a situation in which decision-making has come to a standstill due to the inability of the parties to agree.
Deal structure refers to the framework and arrangement of financial and non-financial terms in an M&A or investment deal. It includes aspects such as payment terms, asset allocation, liabilities, and other considerations.
Debt financing is a method of raising capital by borrowing funds from lenders, such as banks, financial institutions, or bondholders. It involves repayment of the borrowed amount along with interest over a specified period, and the lender may require collateral or other forms of security.
These are underwriting fees charged by investment banks to issue debt in connection with the transaction.
This is a financial strategy used in M&A where the debt of an acquiring company is transferred to a subsidiary or the acquired company.
This is a legal document that is signed and delivered, often used to transfer ownership of property.
A deferred down payment refers to a portion of the purchase price that is postponed or delayed to a future date in a transaction. It allows the buyer to make the payment at a later time, often based on certain conditions or milestones.
Deferred payments refer to payments that are postponed or delayed to a future date as part of a negotiated agreement. Instead of making the full payment upfront, the parties agree to a structured payment schedule where certain amounts or installments are due at specific intervals or milestones. Deferred payments can provide flexibility in managing cash flow, accommodate financial constraints, or align payment terms with the achievement of key performance indicators.
This is the allocation of the cost of a tangible asset to expenses over the asset’s estimated useful life.
Digital transformation refers to the process of utilizing digital technologies to fundamentally change how a business operates, delivers value to customers, and interacts with stakeholders. It involves integrating digital technologies into all aspects of the organization.
This refers to the deterioration of per share metrics following a transaction, typically after the issuance of additional shares.
These are statements that reveal certain information that may be material to an investment decision.
These are adjustments to the valuation of a company based on the level of control an investor can exercise.
This is a rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
This is a valuation model that assigns a value, in today’s dollars, to the discrete cash inflows and outflows that are reasonably expected to occur during future periods.
Distributive negotiation, also known as competitive or zero-sum negotiation, is an approach where parties perceive the negotiation as a win-lose situation. Each party aims to maximize their share of the available resources or value and often involves haggling over price, terms, or concessions.
English 
Deutsch