Knowledge
M&A glossary
Key terms from company acquisitions, financing and valuations – briefly explained. We are happy to answer questions about your project.
- Asset deal
- Purchase of individual assets (property, plant, contracts, rights) rather than shares; liability risks largely remain with the seller.
- Bidding process
- Structured sale process with several bidders, fixed deadlines and offer rounds – creates competition for the best price and terms.
- Carve-out
- Separation of a business unit in order to sell it or finance it on a stand-alone basis.
- Change of control
- Contract clause giving counterparties rights on a change of ownership, such as termination or consent – a key due diligence item.
- Closing
- Completion of the transaction: conditions are satisfied, the purchase price is paid and ownership passes.
- Competent Person Report (CPR)
- Independent report on reserves and resources of mining and energy companies, usually required for listings and financing.
- Confidentiality agreement (NDA)
- Undertaking by interested parties to keep information confidential – a prerequisite for documents and meetings.
- Due diligence
- Careful review of the target before purchase – commercial, legal, tax, technical and environmental.
- Earn-out
- Part of the purchase price that becomes payable after closing if agreed targets (e.g. EBITDA or permits) are met.
- EBITDA multiple
- Common valuation metric: enterprise value relative to earnings before interest, tax, depreciation and amortisation, derived from comparable transactions.
- Enterprise value / equity value
- Enterprise value is the value of the whole business; after deducting net debt, the equity value – the price for the shares – results.
- Farm-in / farm-out
- Acquiring an interest in a licence (e.g. oil & gas) in return for funding investment or exploration costs.
- Information memorandum
- Detailed sales document on business model, market, figures and plan – provided to interested parties after signing a confidentiality agreement.
- Letter of intent (LOI)
- Declaration of intent with price range, structure and timetable; usually non-binding, with binding exclusivity and confidentiality.
- Locked box
- Purchase price mechanism based on fixed reference accounts; from that date no value may leak to the seller.
- Management buy-out / buy-in (MBO/MBI)
- Acquisition of a company by its own (MBO) or an external management team (MBI), usually with financial investors and debt.
- Market valuation
- Estimate of the price a property or company would achieve on the market at a given valuation date, to the required standard.
- Mezzanine and hybrid capital
- Financing between equity and debt, e.g. subordinated loans, silent partnerships, subordinated convertible capital, participation rights, convertible or hybrid bonds – higher interest, subordinated and, depending on structure, recognisable as equity; strengthens the equity base without diluting voting rights.
- Minimum compensation (floor fee)
- Lower limit of the success compensation, payable on completion regardless of the transaction value.
- Origination
- Initiation of a transaction: identifying and confidentially approaching suitable buyers, targets or providers of capital.
- Retainer
- Monthly advisory compensation during the mandate; usually credited against the success compensation on completion.
- Reverse takeover (RTO)
- Stock exchange listing by merging into an already listed company – an alternative to a classic IPO.
- Share deal
- Purchase of the shares; the company passes to the buyer with all rights, obligations and risks.
- Signing
- Execution of the purchase agreement; closing follows once the agreed conditions are met.
- Squeeze-out
- Exclusion of minority shareholders against fair cash compensation when a majority shareholder holds the statutory threshold.
- Success compensation (success fee)
- Adviser compensation payable only on successful completion, usually a percentage of the transaction value.
- Teaser
- Anonymous short profile of the company for the initial approach, without revealing its name.
- Term sheet
- Summary of the key terms of a financing or investment as the basis for contract negotiations.
- Vendor due diligence
- Review commissioned by the seller before the sale process – speeds up the process and strengthens the negotiating position.
- Virtual data room
- Secure online platform providing due diligence documents with access rights, logs and a Q&A process.
- W&I insurance
- Insurance of the warranties in the purchase agreement (warranty & indemnity); relieves the seller and eases agreement.
As of October 2026 · The explanations are for general information only and do not replace advice.