Trending Terms
Understanding the language of M&A is key to making informed decisions when buying, selling, or valuing a business. Whether you’re a business owner preparing for an exit, an investor evaluating opportunities, or simply looking to expand your knowledge, this glossary provides clear, concise definitions of essential M&A, valuation, and exit planning terms. As we spotlight these terms on social media, you can always return here for a deeper dive into the concepts that shape successful transactions.
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Core Financial Metrics & Valuation Terms
(Earnings Before Interest, Taxes, Depreciation, and Amortization) – A measure of a company's profitability before non-operational expenses.
A valuation method based on future cash flow projections, adjusted for present value.
M&A Deal Structures & Terms
The comprehensive appraisal of a business before a sale, ensuring accuracy in financials and operations.
Two main ways to acquire a business: buying shares (entire entity) or buying select assets/liabilities.
Non-Compete Agreement
A clause that prevents a seller from starting a competing business for a set period.
Legal & Intellectual Property Considerations
Legal protection for original works of authorship, including logos, branding, and software.
Patents
Exclusive rights granted for inventions, preventing others from copying or selling them.
Indemnification
A legal agreement where one party compensates another for potential losses or damages.
Confidentiality Agreement (NDA)
A contract ensuring sensitive business information remains private.
Exit Planning & Business Transition
Succession Planning
Developing a strategy for transferring business ownership, whether through sale or internal leadership shifts.
Seller Financing
When the seller provides financing to the buyer as part of the purchase agreement.
Working Capital Adjustment
A clause ensuring a business has adequate capital at the time of sale.
Strategic vs. Financial Buyer
A strategic buyer seeks operational synergies, while a financial buyer focuses on investment returns.
Breakup Fee
A financial penalty if one party backs out of an agreed-upon deal.