Seller Financing
This is when the seller provides a loan to the buyer to cover a portion of the purchase price. The buyer then repays the loan over time, typically with interest.
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 when the seller provides a loan to the buyer to cover a portion of the purchase price. The buyer then repays the loan over time, typically with interest.
This refers to the information that the seller of a business is aware of at the time of an M&A transaction.
This is a method of testing how sensitive certain outputs in a financial model are to changes in certain assumptions.
This is the offer price divided by the acquirer’s share price.
This is any discount (if any) to the current market price that will be used to determine the number of shares the target receives.
An SPA is a legal contract, agreement, or arrangement between a buyer and a seller that outlines terms and conditions for the purchase and sale of shares in a company.
This is a type of deal where the acquirer purchases all the shares of the target (and assumes all assets and liabilities).
This is the value delivered to the shareholders of a company due to management’s ability to increase earnings, dividends, and share price.
These are key stages in an M&A transaction, with signing referring to the signing of the agreement, and closing referring to the completion of the transaction.
An SMB refers to a business that falls within a certain size range, typically based on factors such as revenue, number of employees, and market presence. SMBs play a significant role in the economy and often face unique challenges and opportunities.
SMB financing refers to the various financial options available to small and medium-sized businesses for funding their operations, growth, or specific projects. It includes loans, lines of credit, grants, and other forms of financing tailored to SMBs.
SMB networking refers to the process of building relationships and connections with other small and medium-sized business owners and professionals. It helps SMBs expand their reach, gain knowledge, and collaborate on opportunities.
Social impact refers to the positive effects that an investment or business activity has on individuals, communities, or society as a whole. It includes improving social well-being, reducing inequality, and addressing social challenges.
A spin-off is a transaction in which a company separates a part of its business into a new independent entity. The new entity receives assets, liabilities, and operations related to the spun-off business segment, allowing it to operate independently or pursue its own strategic direction.
A stock acquisition is a transaction in which a company acquires a controlling interest in another company by purchasing its shares. It enables the buyer to gain ownership and control of the entire business, including its assets, liabilities, and operations.
This is the portion of the purchase price given to the target in the form of shares of the acquirer’s stock.
A stock purchase involves buying the shares of a company, giving the buyer ownership of the company’s assets, liabilities, and equity.
A stock-for-stock exchange is a type of transaction where the acquiring company offers its own shares as consideration for acquiring the target company. It allows the target company’s shareholders to become shareholders of the acquiring company.
This is a buyer who is in the same industry or a related industry and can achieve synergies from the acquisition that other buyers cannot.
Strategic silence is a tactic in negotiation where a party intentionally remains silent or refrains from speaking during specific moments to gain an advantage. It can create discomfort, prompt the other party to disclose more information, or encourage concessions.
Succession planning is the process of identifying and developing new leaders within a company to ensure a smooth transition of ownership or management when key personnel retire or leave the organization.
Sustainability reporting is the practice of publicly disclosing a company’s environmental, social, and governance (ESG) performance and impacts. It provides transparency and accountability to stakeholders and investors.
Sustainable investment, also known as socially responsible investing (SRI) or ESG investing, refers to the practice of considering environmental, social, and governance (ESG) factors in investment decisions. It aims to generate financial returns while also making a positive impact on society and the environment.
These are cost savings and revenue enhancements that are expected to be achieved in connection with a merger/acquisition.
In the context of M&A, synergy refers to the idea that the combined value and performance of two companies will be greater than the sum of the separate individual parts.
Synergy realization refers to the process of achieving the expected benefits and efficiencies from an M&A deal, such as cost savings, new revenue opportunities, or strategic advantages.
A take-private deal is a transaction where a publicly traded company is purchased and, as a result, stops being listed on a public exchange.
A takeover is a type of acquisition where one company (the acquirer) purchases another company (the target) with or without the agreement of the target’s management.
A term sheet is a non-binding document that outlines the key terms and conditions of an investment or financing deal. It provides a framework for negotiation and serves as a basis for drafting the final agreement.
This is a financial situation in which a company is carrying more debt than equity.
These are claims made by individuals or entities who are not parties to the contract but who may have rights or claims related to the transaction.
This is when a bank or other financial institution provides a loan to the buyer to finance the purchase of a business.
Transaction costs are the expenses incurred during the process of completing an M&A deal. These costs can include professional fees for legal, financial, or advisory services, as well as expenses related to due diligence, regulatory compliance, and integration planning.
This refers to the way a business sale is organized, including the mix of cash, debt, and equity, and the timing of payments.
This is a strategy used by corporations to take advantage of more favorable tax treaties available in certain jurisdictions.
The triple bottom line is a framework that considers three dimensions of business performance: economic, social, and environmental. It measures the company’s impact beyond financial profits, taking into account social and environmental outcomes.
User experience (UX) design focuses on enhancing user satisfaction by improving the usability, accessibility, and enjoyment of interacting with digital products or services. It involves understanding user needs, conducting research, and designing intuitive and user-friendly experiences.
Valuation is the process of determining the financial worth or fair value of a company, asset, or investment. Various methods, such as discounted cash flow (DCF), market multiples, or asset-based approaches, are used to assess the value based on financial and non-financial factors.
Venture capital is a form of private equity investment provided to early-stage or high-growth companies with significant growth potential. Venture capitalists invest in exchange for equity ownership and typically provide expertise, mentorship, and support to the company.
A vertical merger is a combination of two companies operating in different stages of the same supply chain or distribution channel. It involves the integration of upstream and downstream activities to streamline operations, reduce costs, or gain a competitive advantage.
Walkaway rights, also known as termination rights, are provisions in a contract that allow one or both parties to terminate the deal under specific circumstances. It provides an exit option if certain conditions or obligations are not met.
Win-win negotiation is an approach that aims to achieve mutually beneficial outcomes for all parties involved in a negotiation. It emphasizes collaboration, problem-solving, and seeking solutions that satisfy the interests and needs of both sides.
Working capital is a measure of a company’s operational liquidity. It’s calculated as current assets minus current liabilities.
This is an adjustment to the purchase price in an M&A transaction based on changes in the target’s working capital between the signing and closing of the deal.
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