- Acqui-hire
- An acquisition mainly to secure the target's team and skills.
- Deal structure
- Adjusted EBITDA
- EBITDA normalised for one-off, non-recurring or owner-specific items to show sustainable earnings.
- Valuation & finance
- APAAsset Purchase Agreement
- The binding contract governing the sale and purchase of assets.
- Acronyms
- ARR / MRRAnnual / Monthly Recurring Revenue
- Contracted subscription revenue on an annual or monthly basis; a key value driver for SaaS businesses.
- Acronyms
- Asset sale
- The buyer acquires selected assets (and possibly liabilities) rather than the company itself.
- Deal structure
- Bolt-on
- A smaller acquisition added to an existing platform business.
- Deal structure
- Cash-free, debt-free
- A pricing basis where the seller keeps surplus cash and repays debt, so the headline price reflects enterprise value.
- Valuation & finance
- Change of control
- A contract clause triggered when ownership changes, sometimes allowing counterparties to terminate.
- Legal & diligence
- CIM / IMConfidential Information Memorandum
- A detailed document describing the business, released to qualified parties after an NDA.
- Acronyms
- Completion / Closing
- The point at which ownership transfers and consideration is paid.
- Process
- Completion accounts
- Price adjusted after completion based on accounts drawn up at the completion date.
- Deal structure
- CPsConditions Precedent
- Conditions such as regulatory or third-party approvals that must be met before completion.
- Acronyms
- Deferred consideration
- A fixed part of the price paid at agreed future dates rather than at completion.
- Deal structure
- Disclosure letter
- The seller's document qualifying the warranties by disclosing known exceptions.
- Legal & diligence
- Drag-along / Tag-along
- Rights letting majority holders force minorities to sell (drag) or minorities join a sale (tag).
- Legal & diligence
- Due diligence
- The buyer's investigation of financial, legal, commercial, tax and operational matters.
- Legal & diligence
- Earn-out
- Part of the price paid later, contingent on the business achieving agreed future performance.
- Deal structure
- EBITDAEarnings Before Interest, Tax, Depreciation and Amortisation
- A proxy for operating cash earnings, commonly used as the base for valuation multiples.
- Acronyms
- Equity Value
- Enterprise value less net debt and debt-like items, adjusted for working capital — what shareholders actually receive.
- Valuation & finance
- Escrow / Retention
- Part of the price held back by a third party or the buyer to cover potential claims.
- Deal structure
- EVEnterprise Value
- The value of the operating business to all capital providers, before deducting debt and adding cash.
- Acronyms
- Exclusivity
- A period, usually agreed in the LOI, during which the seller will not negotiate with other parties.
- Process
- Indemnities
- Promises to reimburse specific identified losses pound for pound.
- Legal & diligence
- IOIIndication of Interest
- A non-binding early offer setting out an indicative price range and key assumptions.
- Acronyms
- Leakage
- Value extracted from the target to the seller after the locked-box date, such as dividends or bonuses.
- Deal structure
- Locked box
- Price fixed by reference to historic accounts, with protection against value leaking to the seller afterwards.
- Deal structure
- LOI / HoTLetter of Intent / Heads of Terms
- A largely non-binding document recording agreed principal terms before full diligence and contracts.
- Acronyms
- MAC / MAEMaterial Adverse Change / Effect
- A clause allowing a party to withdraw if a significant adverse event occurs before completion.
- Acronyms
- MBO / MBIManagement Buy-Out / Buy-In
- Acquisition led by existing management (MBO) or by an external management team (MBI).
- Acronyms
- Multiple
- Price expressed as a multiple of a metric such as revenue or EBITDA, used for comparison across transactions.
- Valuation & finance
- NDANon-Disclosure Agreement
- A confidentiality agreement signed before identifying information or detailed financials are shared.
- Acronyms
- NWCNet Working Capital
- Current operating assets less current operating liabilities; often compared to a normalised target at completion.
- Acronyms
- PMIPost-Merger Integration
- Combining people, systems and operations after completion to realise the expected benefits.
- Acronyms
- Q&A process
- Structured written questions and answers during diligence, tracked and approved before release.
- Process
- QoEQuality of Earnings
- A financial diligence report testing whether reported earnings are accurate, sustainable and cash-backed.
- Acronyms
- Restrictive covenants
- Non-compete and non-solicit undertakings given by the seller after the sale.
- Legal & diligence
- Share sale
- The buyer acquires the shares of the company, taking on its assets and liabilities.
- Deal structure
- Signing
- Execution of the binding sale agreement; completion may occur simultaneously or later.
- Process
- SPAShare Purchase Agreement
- The binding contract governing the sale and purchase of shares.
- Acronyms
- Teaser
- A short anonymised profile describing sector, geography and banded financials without identifying the business.
- Process
- TUPETransfer of Undertakings (Protection of Employment)
- UK rules protecting employees whose employment transfers in an asset or business transfer.
- Acronyms
- VDDVendor Due Diligence
- Diligence commissioned by the seller and shared with bidders to speed up the process.
- Acronyms
- VDRVirtual Data Room
- A secure online repository where diligence documents are shared with controlled, logged access.
- Acronyms
- Vendor loan
- The seller lends part of the price to the buyer, repaid over time.
- Deal structure
- W&I insuranceWarranty & Indemnity insurance
- Insurance covering losses from warranty breaches, reducing reliance on seller recourse.
- Legal & diligence
- Warranties
- Contractual statements of fact about the business; breach can give rise to a damages claim.
- Legal & diligence
- Working capital peg
- The agreed normal level of working capital; deviations at completion adjust the price up or down.
- Valuation & finance
