Glossary of M&A
- Asset Purchase Agreement (APA) – An Asset Purchase Agreement is a legal contract that outlines the terms and conditions for the purchase of specific assets, rather than the entire company, in a merger or acquisition.
- Communication Plan – The Communication Plan in an M&A transaction details the strategies and timelines for communicating with stakeholders, including employees, customers, and investors, to manage the flow of information throughout the process.
- Confidential Information Memorandum (CIM) – A Confidential Information Memorandum is a detailed document provided to potential buyers, offering an in-depth overview of the target company’s business, financials, and operations.
- Day 1 Separation – Day 1 Separation refers to the planned steps and actions taken to separate a company’s operations, assets, and legal structure once an acquisition is completed, ensuring the integration process begins smoothly.
- Due Diligence – Due Diligence is the thorough investigation and evaluation process where the buyer examines the target company’s financials, legal standing, operations, and other critical factors to assess its value and risks before finalizing the deal.
- Indications of Interest (IOI) – An Indication of Interest is a preliminary, non-binding statement made by a potential buyer expressing interest in acquiring a company, typically including a rough valuation and terms.
- Investment Banker – A financial professional who advises companies on complex financial transactions while facilitating deals between businesses and investors.
- Legal Day 1 – Legal Day 1 marks the official date on which the legal separation and transfer of ownership or assets in an M&A transaction occur, often after the closing process.
- Letter of Intent (LOI) – A Letter of Intent is a formal document that outlines the buyer’s intent to acquire the target company, specifying key terms and conditions, although it is not legally binding.
- M&A (Mergers and Acquisitions) – M&A refers to the business process of combining two companies (merger) or one company acquiring another (acquisition), typically to enhance strategic, operational, or financial capabilities.
- Non-Disclosure Agreement (NDA) – A Non-Disclosure Agreement is a legal contract that ensures confidentiality between parties, typically signed before sensitive information is shared during the M&A process to protect proprietary information.
- Sale and Purchase Agreement (SPA) – A Sale and Purchase Agreement is a legally binding contract between the buyer and seller that formalizes the terms of the sale, including the purchase price, representations, warranties, and obligations of both parties.
- Synergy – The enhanced value and performance that result from the combination of two companies, where the merged entity achieves greater efficiency, cost savings, revenue growth, or strategic benefits than either company could independently.
- Teaser – A Teaser is a brief, high-level marketing document sent to potential buyers that provides key information about the target company to spark interest without revealing sensitive details.
- Valuation – The process of determining the economic worth of a company using various methods, such as market comparisons, asset-based approaches, and income-based analyses, to assess its fair value for purposes like mergers, acquisitions, investment, or financial reporting.
- Virtual Data Room (VDR) – A Virtual Data Room is a secure online platform used to store and share confidential documents and information related to the M&A process, typically used for due diligence by potential buyers.
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