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Glossary of Terms

A comprehensive glossary featuring the most essential terms and concepts in the M&A industry, offering straightforward definitions and explanations. 

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Earnings and asset growth which occur due to business expansion.

Acquiree or Target

A company purchased or otherwise taken over during an acquisition or merger.

Acquirer or Buyer or Offeror

The company undertaking the merger or acquisition of another company.


A corporate transaction to buy a company, division, or assets.

Acquisition Premium

The difference between the price paid for a company and its estimated real value.

Adjusted EBITDA

Adjusted EBITDA is a financial metric that includes the removal of various one-time, irregular, and non-recurring items from EBITDA (Earnings Before Interest Taxes, Depreciation, and Amortization).

Adjusted Earnings

A method of assessing financial performance which compensates for atypical profits and expenses, such as capital gains, new investments, tax liabilities, loss revenues, etc. By removing such factors—factors that are not a part of a company’s typical financial workings—the adjusted earnings metric is intended to reflect financial robustness more accurately.


An investment banker or someone with similar experience that advises owners and management teams how to prepare the company to be sold, financial analysis, prepare presentations and facilitate negotiations with potential buyers and investors.


An individual who acts on behalf of the principal in a deal. The principal, expressly or implicitly, authorizes the agent to work under their control and on their behalf. The agent negotiates on behalf of the principal or brings them and third parties into contractual relationships.

Amalgamation or Consolidation

An amalgamation occurs when two or more companies blend to form a new entity. It is distinct from a merger because none of the amalgamating companies survive as independent legal entities.

Amortization Period

The time period it will take to repay a mortgage in full.

Angel Capital

Investment into early stage companies.


A procedure where figures covering a period of less than one year are multiplied by a factor that would make them equivalent to a 12-month period.


The increase in value of a financial asset.

Asset Acquisition

A form of acquisition in which the acquirer purchases the assets of a target rather than its stocks. There are often tax advantages to this structure, and it helps the buyer avoid unknown or undisclosed liabilities.

Asset Class

Securities with similar features. The most common asset classes are stocks, bonds, and cash equivalents.

Asset Sale

A form of acquisition in which an acquirer purchases a target company’s assets without purchasing the stock of the company. The seller must therefore settle all existing liabilities and debts before taking the net cash proceeds.

Asset-Based Approach

A company valuation metric in which total liabilities are subtracted from Net Asset Value. Used primarily to determine what it would cost to re-create a business.

Asset-Based Lending

A method of financing in which a business loan is secured using company assets as collateral.

Asset-Based Revolver

A specific type of revolving loan where the amount fluctuates based on changes in inventory levels, accounts receivable, equipment or property ownership.

Backward Integration

A form of acquisition in which the target company is a supplier to the acquirer.


A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans.


Asset for asset exchange for perceived equal value. The earliest form of retail acquisition.

Base Year

The earliest year in a set of years used to calculate a financial trend.


A collection of securities (typically fifteen or more) grouped together for simultaneous purchase or sale. Often used as a part of program trading.

Black Knight

A company that makes an unwanted takeover offer (hostile takeover) to a target.

Board of Trustees

A governing board elected or appointed to direct the policies of an institution.

Book Value

The value of a company as determined by subtracting intangible assets and liabilities from total assets.

Boutique Investment Banking Firm

A smaller investment banking firm offering a more focused set of investment banking services. They often focus on one of the following services: buy-side M&A, sell-side M&A, capital raises or consulting services. They may also offer all services, but with a focus on a particular industry such as entertainment, agriculture, industrial, manufacturing, retail, real estate, energy, healthcare, media, sports, and financial institutions. Small and middle-market firms often hire these firms on retainers or as needed rather than keep them on staff or have in-house teams.


A person or firm who arranges transactions between buyers or sellers for commission after the deal is completed.


A person or firm in the business of buying and selling securities for its own account or on behalf of its customers. Acting as a broker (agent) when executing orders on behalf of its clients and as a dealer (principal) when it trades for its own account.

Bulge Bracket Bank

A name given to the world's largest investment banks. They often operate across nations and service large corporations, institutional investors, and governments.

Business Broker

An individual or company that assists mainly in the sale or purchase of small, main street businesses.

Business Cycle

A recurring cycle of economic expansion and contraction, typically taking place over three to four years.

Business Model

A company’s core strategy for making a profit, with a focus on the product, services, market, and costs.

Business Plan

A written document that describes a new business concept, a current business concept or future plans for a company.

Business Valuation

The process of determining the economic value of a company.

Buy-Side M&A

The buyer or buyer’s advisor in an M&A transaction with the goal to acquire companies, competitors, or other strategic entities with the purpose of increasing the strategic position and the value of the company. Buy-Side Advisory assists with the process.


A person or company that is in a position to acquire an entity or piece of an entity.


The acquisition of a controlling interest in a company.


The funds invested in a company for what is considered a long-term basis in exchange for a percentage ownership of the company.

Capital Gains

The difference between a security's purchase price and the selling price if the difference is positive.

Capital Loss

The difference between a security's purchase price and the selling price if the difference is negative.

Capital Structure

The unique combination of debt, equity, and hybrid securities through which a company finances its operations.


The market value of a company is calculated by multiplying the number of shares outstanding by the price per share.

Capitalization Factor or Capitalization Rate or Cap Rate

A value metric representing the income expected from an investment, computed as the inverse of the expected rate of return.

Capitalization Ratio

A series of metrics/indicators which measure the proportion of debt in a company’s total capital structure.

Capitalizing Net Income or Capitalization of Earnings

A method of valuing a business in which the company’s expected future earnings are divided by the Capitalization Factor.


To create a new, smaller company from a larger company that operates independently from the larger company.

Cash Consideration

The percentage of the purchase price of a company to be paid to the target in cash.

Cash Flow

The amount by which a company’s net cash income exceeds its net cash expenses.

Cash Flow Loan

A cash flow loan is a term loan that is made based on past and forecasted cash flow because the borrower does not have sufficient assets to collateralize the loan. Cash flow loans are usually amortized for a relatively short duration, ranging from four to eight years.

Cash Flow Statement

A financial statement displaying comprehensive data regarding incoming and outgoing cash flows in a business.

Certified Public Accountant (CPA)

An accountant by trade that has passed the Uniform CPA Examination and meets the education and experience requirements. They perform standard accounting operations and in addition are authorized to prepare audited or reviewed financial statements and file a report with the Securities and Exchange Commission.

Change of Control

A significant change of ownership of an asset or entity that is brought upon through a merger, business restructuring or acquisition.

Chief Financial Officer (CFO)

A senior executive who is responsible for the financial affairs of a corporation or other institution. Many small and middle-market companies choose to out-source their CFO services, a service that an investment banker can often offer.

Circular Merger

One of the three traditional forms of merger, a circular merger occurs when a company acquires targets in the same or related industries to diversify its product offering.

Clandestine Takeover

A takeover strategy in which an acquirer slowly and quietly purchases shares in a target with the goal of accumulating a controlling stake.


This hedging approach involves buying protective puts and selling call options whose premiums offset the cost of buying the puts. As with a covered call, the upside appreciation for your holding is then limited to the call’s strike price.


Something pledged to secure the repayment of a loan or forfeited in the event of default. Often equipment, business assets or receivables can be used as collateral.

Commercial Bank

A commercial bank is a type of bank that provides services to businesses accepting deposits, making business loans, and offering basic investment products to businesses for profit.

Common Stock

Securities that represent ownership in a corporation that are issues by the corporation.

Compensation Manipulation

Occurs when the upper management of a company seeks out mergers and acquisitions with the intent of achieving growth solely in order to receive a corresponding increase in salary.

Competitive Bid or Competitive Bidding

A competitive bid is when a company receives more than one offer to buy all or a part of their business or assets. M&A sale processes organized by investment bankers often design a sale process that will ensure a competitive bidding process to ensure the seller receives maximum value for their business.

Competitive Market

A tactical strategy that creates a business environment of several potential buyers that compete, to buy all or part of a business or asset for sale.

Confidential Business Profile or Confidential Business Review

A confidential marketing document circulated among potential buyers of a for sale company. The CBP gives an overview of the financial workings of the target company and is usually only distributed following the completion of a non-disclosure agreement.


A term used for presenting a deal to a buyer or seller anonymously. Often deals are not shared with employees, customers, suppliers, or the competition to ensure the best deal point and to not upset ongoing business.

Conflict of Interest

A situation or opportunity in which a person(s) may gain personal benefit from maneuvers or decisions made while operating in an official capacity.

Conglomerate Merger

A merger between two companies in different industries.

Consulting Agreement

A term-of-sale in M&A requiring select staff members of the target company (usually upper management) to stay on as consultants for a predetermined span of time.

Continuing Operations

A net income category found in income statements; continuing operations include all expenses necessary for the daily business activities of a company.

Conversion Price

The price at which a common stock can be obtained in trade for other assets, commonly bonds or preferred shares.

Corporate Bond

A bond issued by a corporation intended to raise outside capital to be used on a long-term basis.


A company or group of people authorized to act as a single entity and recognized as such in law. Voting rights may vary per corporation to determine how the entity makes choices on behalf of the entire group. Often the term is used generally to describe a business regardless of ownership structure, along with company.


A promise or obligation included in an indenture or other compulsory form of contract. A covenant guarantees that certain actions will or will not be taken out. They are often stipulated by creditors as a part of the business loan process.

Covenant not to Compete or Non-Compete Clause

A covenant, often found in acquisition agreements, prohibits the seller from engaging in future business in competition with the entity being sold.

Crown Jewels

The most highly valued aspects of a business as seen in terms of asset value and profitability. The crown jewels are what set a company apart from its peers—its best product, its most powerful service. Sometimes a buyer acquires a target company solely to gain access to its crown jewels, with no intention of integrating the rest of the target’s assets.

Crown Jewels Defense

A scorched earth hostile takeover defense in which a company sells off its crown jewels to forestall an acquisition.

Currency Exchange

The exchange of goods and services for an agreed upon legal tender. The invention of currency changed the way that humans conducted business, allowing the sale of assets, goods, and services in exchange for money or a promissory note to be paid.

Dawn Raid

A form of hostile takeover in which the would-be acquirer attempts to buy all outstanding shares of a target’s stock as the market opens in the morning.

Dead Hand Provision

A special type of poison pill in which the stock position of the bidder is massively diluted by issuing new stock to every shareholder but them.

Deal Structure

The combination of assets with which an acquisition is financed—can include cash, stocks, notes, consulting agreements, etc.

Debt Financing

Raising money for working capital through the sale of bonds, bills, or notes to individual and/or institutional investors in exchange for a promise to repay the debt with interest.


Failure of a debtor to make payments of interest and principal on their due date or allotted window of payment.

Defensive Merger

A corporate strategy involving the acquisition of or merger with other firms to forestall a market downturn or impending takeover.

Deferred Financing Cost or Debt Issuance Cost

A fee or commission paid to an investment bank in exchange for their issuance of debt.

Demerger or Corporate Split or Division

A demerger occurs when a branch or division within a business is split off to form its own company. In the case of public companies, some stock is transferred to the new entity.


A reduction in the percentage of company ownership of stock caused by the release of new shares onto the market.


To sell part of a business asset or investment.

Due Diligence

Due diligence is a process of verification, investigation, or audit of a potential deal or investment opportunity to confirm all relevant facts and financial information and to verify anything else that was brought up during an M&A deal or investment process.


In accounting and finance, earnings before interest and taxes (EBIT) is a measure of a company's profitability that includes all incomes and expenses (operating and non-operating) except interest expenses and income tax expenses. EBIT = (net income) + interest + taxes = EBITDA – (depreciation and amortization expenses)


In accounting and finance, earnings before interest, taxes, depreciation and amortization (EBITDA) is a measure of company profitability that includes all incomes and expenses (operating and non-operating) except interest expenses and income tax expenses and depreciation and amortization. EBIDAT = (net income) + interest + taxes + (depreciation and amortization expenses). It is often thought of as a quick proxy for the cash flow of the company.


A provision included in some acquisition agreements obligating the acquirer to make additional payments to the seller based on the future performance of the company sold.

Economic Life

The span of time over which an entity expects an asset to remain viable.

Economy of Scale

Term reflecting the proportional decrease in operating costs accomplished by increasing production.

Economy of Scope

Term reflecting the savings realized by manufacturing multiple goods together instead of separately.

Empire Building

An acquisition strategy motivated solely by perceived increases in prestige or status implicit in company growth.

Employee Stock Ownership Plan (ESOP)

An employee stock ownership plan (ESOP) is an employee benefit plan that gives workers ownership interest in the company in the form of shares of stock. ESOPs give the sponsoring company—the selling shareholder—and participants various tax benefits, making them qualified plans, and are often used by employers as a corporate finance strategy to align the interests of their employees with those of their shareholders.

Endowment Fund

An investment fund established by a foundation that makes consistent withdrawals from invested capital. The money in the fund is often used by universities, nonprofit organizations, churches, and hospitals for funding. Money can be raised or donated and added to the fund.

Enterprise Value (EV)

The value of a company calculated as market capitalization plus long-term debt minus cash and short-term investments. Intended to represent the total cost an acquirer would pay to take over a business.


The shareholders' stake in the business, identified on a company's balance sheet. To calculate the equity, take the company's total assets minus its total liabilities.

Equity Carve Out or Split-off IPO

A type of demerger in which a company creates a new entity out one of its subgroups to offer in an IPO. The parent company retains management control.

Equity Financing

The process of raising capital through the sale of shares.

Equity Issuance Fees or Stock Issuance Fees

Fees charged by investment banks to underwrite the release of new stocks to the market.

Excess Purchase Price

The difference between the price paid for a company and the total sum of its assets.

Exercise Price or Strike Price

The price per share at which the owner of a stock is authorized to sell or trade their position.

Fair Market Value

The price of an asset when both buyer and seller are approaching the transaction from a well-informed and unpressured position.

Fairness Opinion

An evaluation process that reviews the facts of a merger, acquisition, carve-out or another asset or business transaction and provides an opinion on the fairness of the proposed stock price to the selling and acquiring individual or business.

Family Office

A family office is a privately held company that handles investment management and wealth management for a wealthy family, generally one with at least $50–100 million in investable assets, with the goal being to effectively grow and transfer wealth across generations.

Financial Analysis

Review of all current and past financial documents, prepared forecasts and business cost analysis and make recommended adjustments, reclassifications and create additional reports.

Financial Analyst

An individual with a financial or accounting background that has the ability to review and make recommendations regarding financial reports and documents.

Financial Buyer

Financial buyers can generally be classified as investors interested in the return they can achieve by buying a business. They are interested in the cash flow generated by a business and the future exit opportunities from the business. They are typically individuals or companies with money to invest, and who are willing to look at many different types of businesses or industries.

Financial Plan

A strategic outline to achieve financial goals.

Financial Statements

Generally used reports that state the financial performance and standing of a business often including the income statement, balance sheet and cash flow statement.


A type of poison pill which allows existing shareholders to buy target company stock at a discounted rate in the event of an attempted takeover.


A poison pill strategy allowing existing target company shareholders to buy the acquiring company stock at a discounted rate in the event of a successful takeover.

Forward Integration

Forward integration, a form of vertical integration, is when a strategic acquirer moves downstream, which means that the company gains more control over the later stages of the value chain. Common examples of business functions considered to be “downstream” are distribution, technical support, sales, and marketing.


A set amount of money or assets that once established are not designed to have additional assets or money added. Often the interest gained by the fund and or a percentage of the fund is used to make donations, investments and support a wide range of requests.

Friendly Mergers

Acquisitions and mergers take place as a result of negotiation and mutual interest rather than hostile takeover.

Full-Service Investment Bank

Offering a full range of investment banking services including advisory, analysis and transactions. Many full-service investment banks work with large-market and big business, allowing them to employee a full spectrum of expertise. The requirements to work with a large investment banking firm often fall in the transaction size or companies that are on retainer. Some larger corporations have their own investment bank division.

Fully Diluted Shares Outstanding

The total number of shares outstanding after all convertibles and options are exercised.


A pool of money often collected by private investors, family offices or investment groups that buy securities in companies to provide capital in exchange for ownership, a share of the profits or other agreed upon benefit.

Godfather Offer

An offer made by an acquirer to a target which is too good to refuse.

Golden Parachute

A large payment or other financial compensation guaranteed to high-level executives should they be dismissed as the result of a merger or takeover.


An intangible benefit resulting when a company acquires a target at a premium.

Gray Knight

A follow-up bidder in a public offering which attempts to take advantage of problems between the target and initial bidder. The gray knight often offers itself as an alternative to the black knight in an attempted hostile takeover.


A form of extortion in which a substantial block of shares in a business is purchased by an unfriendly company, which then forces the target company to repurchase the stock at an inflated price to prevent a takeover.

Holding Company

A company formed to buy or hold majority shares in other companies.

Horizontal Merger

A merger between two companies in the same industry.

Hostile Takeover or Corporate Raid

Any merger or acquisition undertaken without the support of management at the target company.

Identifiable Assets

All company assets—both tangible and intangible—which can be assigned a fair value.


An increase in the prices of goods and services.

Initial Public Offering (IPO)

The act of offering shares of a private corporation to the public.


Non-physical business assets including patents, trademarks, business methodologies, brand recognition and public goodwill.

Interest Rate

The interest percent that a bank or other financial company charges you when you borrow money, or the interest percent it pays you when you keep money in an account

Interlocking Shareholdings or Cross Shareholdings

The mutual exchange of shares between a group of companies—meant to bond the companies together without actually merging them.

Intrinsic Value

The value of a company according to a close analysis of its finances rather than its market value.

Investment Bank

A company or division of a corporation that offers advisory services, facilitates merger and acquisition transactions, seeks capital, financial reviews and advises on business opportunities. The team is often formed with a team of seasoned financial advisors with general business knowledge, who often have real life experience to bring a board perspective to incoming and the pursuit of business opportunities.

Investment Banker

An individual or team who advises companies, facilitates the sale of the company, assists in raising capital, guides you through a merger or acquisition and offers overall business and financial strategy. Think of an investment banker as your real estate broker for your business that helps to tie all the details together for you and represents the company and your interest. Having someone on your side to lead the way, while you continue to run your company and work with them in the details will help you achieve your goal of selling the company the best way possible.

Investment Company/Fund

A corporation, trust or partnership that invests pooled shareholder dollars in securities appropriate to the organization's objective.


A person or corporation that individually or as a unit invests money in a business or organization in exchange for a percentage of the company, financial gain or a percentage of the profits.

Joint Venture

A business arrangement in which multiple parties combine resources in the pursuit of a common interest.

Junk Bond

A high-risk security, typically issued by companies seeking to raise capital quickly, or by those with poor credit history.

Killer Bee

Firm or individual who helps a company prepare strategies to prevent hostile takeover.

Letter of Intent (LOI)

In the world of mergers and acquisitions, a letter of intent (LOI) is a preliminary document that outlines the terms of a deal between two parties. It is often the first step in the M&A process and serves as a non-binding agreement that sets the stage for due diligence and negotiations leading up to a definitive purchase agreement.

Leveraged Buyout

A leveraged buyout (LBO) is the acquisition of another company using a significant amount of borrowed money (debt) to meet the cost of acquisition.

Line of Credit

A line of credit (LOC) is an arrangement between a financial institution—usually a bank—and a customer that establishes the maximum loan amount that the customer can borrow. The borrower can access funds from the LOC at any time as long as they do not exceed the maximum amount (or credit limit) set in the agreement.

Liquidation Value

The cash value available if the assets of a company were sold.


The ability for a business owner or corporation to have access to money through cash savings or mutual funds that can be exchanged for immediate needs.


Money borrowed for a set % return. The presumption is that a loan will be repaid.

Long-Term Investment Strategy

The investment plan for a company or individual that looks at the long-term investment of money and the long-term gains or ownership.

Management Buyout

A management buyout is a transaction where a company's management team purchases the assets and operations of the business they manage.

Management Fee

The fee paid to advisors for managing a project, transaction, or services. The fee can be a single agreed upon sum, percentage of the deal or a combination.

Mandatory Bid Rule

A rule obligating a new majority shareholder in a business interest to offer to buy any outstanding shares at a fair price.

Market Price

The current valued price of an asset.

Merchant Banker

The bank which brokers an M&A transaction and may also be a buyer in the transaction.


Combining two companies to create a new company. Ownership, management, company name and general directives are determined during the merger process.


The fusion of two or more existing companies into one new entity.

Mergers and Acquisitions (M&A)

A term to designate business transactions regarding changes in business ownership and structure.

Mezzanine Debt or Bridge Capital

A short-term loan and tends to be a higher risk loan.


A designation given to companies that are situated between smaller mom & pop organizations and what would be considered big business. Often, they have between 100 to 2,000 employees or earn $10 million to $500 million.

Minority Capital Raise

An option for raising capital where a company releases less than half of stock ownership in exchange for money, allowing the owner(s) to maintain control.

Net Asset Value

The value of a company’s assets minus its liabilities. Often calculated on a per share basis.

Net Book Value

The value at which a company records its assets in its accounting records.

Offer Price

The price per share offered by an acquirer to a target.

Opportunity Zone

Zones designated in specific communities, neighborhoods, and regions to attract private investors and under certain conditions, be eligible for capital gain tax incentives.

Pac-Man Strategy

A takeover defense strategy in which the target company attempts to take over the hostile acquirer.

Par Value

In finance and accounting, par value means stated value or face value of a financial instrument such as a stock or bond.

Partial Bid or Partial Tender Offer

A bid issued to purchase a predetermined number of shares in a company at above market price, often as part of a hostile takeover.

Pitch Deck

A presentation of a business, business deal or start up that is created for the purpose of raising capital, securing investors, presenting the company for sale and mergers and acquisitions.

Poison Pill or Shareholder Rights Plan

A specific variety of porcupine provisions which involves offering discounted stock prices to existing shareholders in an attempt to make any hostile takeovers overly costly. Poison pill provisions are usually triggered when an unwanted bidder acquires a company standing in the range of ten to twenty percent.

Poison Put

A type of porcupine provision which allows bondholders to sell their bonds back at a premium, rendering a potential takeover costlier.

Porcupine Provision or Shark Repellent

Any strategy used by a company to discourage hostile takeover.


A collection of investments owned by an individual or corporation and managed as a collective often with specific investment goals and strategies in place.

Portfolio Allocation

The implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame.

Preferred Stock

A class of stock with a fixed dividend that has preference over a company's common stock in the payment of dividends and the liquidation of assets. There are several kinds of preferred stock, among them adjustable-rate and convertible.

Private Investor

An individual who invests in a business or corporation in exchange for ownership, a percentage of the company or a percentage of the profits. The individual can determine the parameters for investing, the amount of the investment and the deal points.

Private Transaction

An event that takes place between one or more privately held companies.

Pro Forma Earnings Per Share

The predicted earnings per share should an intended merger or acquisition proceed according to plan.

Pro Forma Shares Outstanding

The predicted number of shares outstanding following the completion of a merger or acquisition.

Program Trading

A type of securities trading carried out by a computer program. Typically consists of the simultaneous execution of baskets of stocks according to predetermined market conditions.

Proxy Fight or Proxy Battle

A shareholder insurrection against corporate governance. Occurs when enough shareholders get together to win a corporate vote.

Purchase Price Allocation

Purchase Price Allocation (PPA) in M&A assigns a fair value to the acquired assets and liabilities of the target company.

Quick Ratio or Acid Test

A measure of liquidity obtained by dividing liquid assets by total liabilities.


A corporate action in which a company substantially restructures its debts to mitigate financial harm and improve business functioning.

Restructuring Charges

One-time costs associated with the acquisition of a new business. May include integration expenses, the cost of laying off employees or moving production plants or offices, etc.

Return On Investment (ROI)

A performance measure used to evaluate the efficiency of an investment. ROI compares the return to the cost of the investment.

Revolving Line of Credit

A line of credit that is arranged between a bank and a business. It comes with an established maximum amount, and the business can access the funds at any time when needed. The other names for a revolving credit facility are operating line, bank line, or, simply, a revolver.


The attempted forestalling of a hostile takeover in the hopes that a white knight will appear.

Scorched Earth Policy

Any porcupine provision in which a company attempts to make itself less attractive to potential hostile takeovers by alerting its internal finances. This can include selling off assets or taking on high levels of debt, among other activities. Even in the event a takeover is averted, the target will still be damaged.

Secondary Offering

An event where one investor sells a large number of shares of a public company to another investor directly. The public company that originally released the shares does not receive cash or profit during the transaction.


A designated industry, business type or other designation to focus investments or business deals.


Another name for investments such as money used to buy stocks or bonds.

Sell-Side M&A

The side of the transaction aimed to prepare and offer a business or large asset for sale. A broker lists a business for sale and an investment banker can prepare, offer business for sale, seek buyers, review financials, and facilitate the transaction on behalf of the business being sold. Sell-Side Advisors assists with the process.

Senior Debt

A company's first tier of debt that holds priority on the company's cash flow, giving the lender the top position in repayment.


A unit of ownership in an investment.

Share Deal or Stock Deal

A form of acquisition in which the acquirer purchases the stock of a target rather than its assets.

Share Exchange Ratio

The number of shares an acquirer issue to target stockholders relative to their preexisting interest.


The owner of common or preferred stock of a corporation.

Single Member LLC

A legal entity that does not have employees, is taxed like a sole proprietorship, and protects the owner's personal assets.

Small Business

Small businesses, also referred to as small and medium-sized enterprises (SMEs), are private corporations, partnerships or sole proprietorships that meet revenue or employee standards, as defined by the U.S. Small Business Administration. According to the most recent government data, there are over 33 million small businesses in the United States, accounting for 99.9% of all American businesses, and employing nearly half of all private sector employees.

Small Business Administration (SBA)

A government agency designed to support small business, provide funding and programs that provide capital, guidance, and benefits to help small businesses succeed.

Sole Proprietor

An individual who owns their business that is not incorporated. Personal assets are not protected in the same way a single member LLC protects them from debtors.

Special Committee

A team established to evaluate a particular transaction and often chosen for their expertise or knowledge of industry.

Spin-Off Transactions

An event that creates a new independent company through the sale or distribution of shares of an existing business or division of a larger company.

Split Off

A method of corporate reorganization in which shareholders of a parent company are offered the chance to exchange their stock for shares in a new subsidiary or affiliate.

Split Up

The division of a company into two or more parts through stock transfer.

Stock Consideration

The portion of the purchase price of the company paid in shares of the acquirer’s stock.

Strategic Buyer

A company primarily interested in acquiring to enhance company functions, processes, or infrastructure. Contrast with Financial Buyer.

Strategic Financial Advisory Services

Business guidance through managing a company's finances with the intention to maximize success. Often attained through helping to set company goals, objectives and facilitating controls that together improve the company’s value.

Strategic Positioning

Presenting a business that distinguishes itself in a valuable way, from its competitors or like business within an industry, marketplace, or company size.

Subordinated Debt

Money owed to an unsecured creditor that is paid back after senior, secured creditors are paid in full.


A company which is owned or controlled by another firm but is left to operate largely on its own terms to preserve branding or customer base.

Suicide Pill

A strategy by which a company willingly forces itself into bankruptcy to avoid a hostile takeover. The most extreme of all hostile takeover defense strategies.

Supermajority Amendment

A hostile takeover defense strategy which requires a supermajority of voting stockholders (from 67% up) to approve a merger.

Swap Ratio

The ratio at which an acquiring company will offer its own shares in exchange for those of the target company.


Cost savings or revenue enhancements anticipated as the result of a merger or acquisition.

Tactical Financial Advisory Services

Develop and facilitate a strategic financial plan with the goal of attaining a specific financial outcome such as an improved ROI, cash flow improvement or expense reduction.


A type of acquisition in which a company attempts to gain ownership of a target, usually by acquiring a controlling interest in its stock.

Takeover Bid

A corporate action in which an acquiring company offers to buy the stock of a target company and take over its business.

Tender Offer

A public offer to the shareholders of a company to sell their stock at a specified price during a specified window of time. The offered buy price is typically higher than the market rate to encourage shareholders to sell.

Term Loan

A bank loan for a specific amount that will have a specified repayment amount and schedule and based on either a fixed or floating interest rate.

Toehold Position

The purchase of less than five percent of a company’s stock to avoid triggering mandatory reports.


The process of taking the financial risk for a loan, insurance, or investments in exchange for a fee. One or more individuals can accept the task of underwriting, each accepting the same or a percentage of the risk and generally receiving the same percentage of the fee.


A qualified opinion of value given to an asset or business at a particular moment in time.

Vertical Merger

A merger of two companies operating in different stages of the production process in the same industry.

Volume Weighted Average Price (VWAP)

The ratio of volume traded to value traded over a particular time period, usually one day.

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