Book of Jargon® – Global Mergers & Acquisitions

An interactive glossary of global M&A acronyms, slang, and terminology.

The Book of Jargon® – Global Mergers & Acquisitions is one in a series of practice area and industry-specific glossaries published by Latham & Watkins.

The definitions provide an introduction to each term and may raise complex legal issues on which specific legal advice is required. The terms are also subject to change as applicable laws and customary practice evolve.

This glossary is intended to provide an introduction to the legal and business terms often encountered in structuring, negotiating, and executing mergers, acquisitions, and dispositions in countries around the world. It addresses both corporate and private equity sponsor terminology.

Included are key M&A terms for the United States, the United Kingdom, France, Germany, Hong Kong, Italy, Qatar, Russia, Saudi Arabia, Singapore, Spain, and the United Arab Emirates.

Search for terms by: 

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The information contained herein is not legal advice and should not be construed as such.

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  • A/B Capital Structure:
    see High Vote/Low Vote
    A/B Structure:
    see High Vote/Low Vote
    ABI:
    acronym for Association of British Insurers, the UK’s leading shareholder group. ABI is the industry body which represents the general insurance, investment and long-term savings industry and liaises with the government, regulators and UK, EU and international policy makers.
    Above the Line:
    refers to items on an Income Statement (or Profit and Loss Statement) which are incurred before the calculation of a company’s gross profit.  Above the Line profit is gross operating profit before deduction of certain expenses to give net profit.
    Acceleration:
    the end of the line in the Bond and loan world. The definitions of “Default” and “Event of Default” describe how we get there. Following an Event of Default, the bondholders (in accordance with the Terms and Conditions or the Indenture) or Lenders (under a Credit Agreement) have the right to “accelerate” the Due Date of their debts; in other words, they have the right to declare their Bonds or loans immediately due and payable. Note that practice in the US (and in European Indentures) is for Insolvency Events of Default to automatically lead to Acceleration, however this is uncommon in European bank financings. Note that Acceleration can lead to an obligation on the officers of the Issuer/Borrower to file for Insolvency, thereby precluding the ability to agree a consensual out-of-court Restructuring.
    Accordo di Ristrutturazione:
    a pre-Insolvency Restructuring agreement under Article 182-bis of the Italian bankruptcy law. Filings bring about a stay on creditor action for 60 days, and the company can obtain an immediate stay preceding the agreement in certain circumstances. Must be supported by a report by an independent auditor attesting the agreement’s feasibility and suitability to allow payment of all external creditors, the approval of 60 percent of the creditors (by value) being required. Must be homologated, or officially approved, by the bankruptcy court.
    Accretion/Dilution Analysis:
    an analysis on a Pro Forma basis to illustrate whether a Business Combination will be Accretive or Dilutive to per Share attributes of the Buyer’s Common Stock, such as Earnings Per Share. An Accretion/Dilution Analysis may be performed on a historical Pro Forma basis (e.g., based on LTM data for the Buyer and the Seller) or on projected Pro Forma basis (e.g., based on NTM projections for the two parties).
    Accretive:
    means that a Business Combination will result (usually measured on a Pro Forma basis) in an increase in a Buyer’s specified measure of financial performance, such as Earnings Per Share
    Accrual:
    in Financial Statements, expected income which is still to be received or expected expenses which are still to be incurred
    Accrued Interest:
    interest that has been earned by the Issuer or Borrower but that has not yet become due and payable (or which has been due but has not been paid)
    AcquiCo:
    abbreviation for the Acquisition company
    Acquired Person:

    another name for a Target Company or party selling assets or Securities in a Business Combination

    1. (US) also a technical term under the Hart-Scott-Rodino Act referring to the Target Company or party selling assets or Securities in a Business Combination
    Acquirer:
    another name for a Bidder, Buyer or Purchaser
    Acquiring Person:

    another name for an Acquirer, Bidder, Buyer, or Purchaser or party acquiring assets or Securities of another party in a Business Combination

    1. (US) also a technical term under the Hart-Scott-Rodino Act referring to the party acquiring assets or Securities of another party in a Business Combination
    Acquisition:
    another name for a Business Combination or shorthand for an Acquisition of Securities or assets of another party
    Acquisition Agreement:
    a generic name for any type of agreement that accomplishes a Business Combination or an Acquisition of Securities or assets of another party
    Acquisition Consideration:
    the cash, Securities, or other assets paid by a Buyer in consideration for the Acquisition of a Target Company’s Shares or assets. Consideration can be structured many ways and not all the consideration is necessarily paid at Closing of the sale and purchase. Some portion of the agreed consideration may be deferred and paid at a later date (referred to as the Deferred Consideration), or the parties may agree to additional consideration being paid if certain triggers are met (referred to as “Additional Consideration,” Contingent Consideration or Earn-Out depending on their nature). The consideration may also be adjusted to take into account changes between signing and Closing, sometimes referred to as an “Adjustment to Consideration” or Purchase Price Adjustment.
    Acquisition Facility:
    a line of credit intended to be used to fund Acquisitions
    Acquisition Line:
    see Acquisition Facility
    Acquisition Proposal:
    an Offer by one party to acquire another party. Also called a Bid, if made pursuant to an Auction.
    ACRA:
    Accounting and Corporate Regulatory Authority, which is the national regulator of business entities and public accountants in Singapore
    Acrylic:
    a slang name for a Deal Toy or Tombstone
    Acting In Concert:

    persons “Acting In Concert” comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal), cooperate, through the Acquisition of Shares in a company, by any one of them to obtain or consolidate effective control of that company

    1. (US) see also Group
    2. (UK) a defined term under the City Code (see Concert Party)
    3. (DEU) a defined term under the German Securities Acquisition and Takeover Act
    4. (ESP) two or more Investors/shareholders working together to achieve the same investment goal over a Spanish Listed Company and/or to acquire control over a Spanish Listed Company
    5. (HKG) a defined term under the HK Takeovers Code.  See Concert Party.
    6. (ITA) a defined term under Article 101-bis of the Consolidated Financial Act and Article 44-quarter of Regulation no. 11971 of 1999
    7. (RUS) activities formally or informally agreed upon between two or more parties (usually shareholders of a company) with the intention of acquiring or consolidating control over a company or certain market niche
    8. (SGP) a defined term under the Singapore Takeover Code
    Activist Investor:
    a generic term for Investors that amass blocks of Stock in a Target Company in order to persuade or help persuade the Target Company to change a fundamental aspect of its business, operations or Management (including voting against a proposed Business Combination supported by the Target Company) with the goal (in the eyes of the Activist Investor) of increasing the trading value of the Target Company’s Common Stock. Activism may range from private conversations with a Target Company’s senior Management or Board, to private or public letter writing campaigns, to Proxy Contests and other contests for control of the Target Company. See also Shareholder Activism.
    Add-on Facility:
    agreement increasing the credit line under the acquisition financing agreements which will be made available at the time of the Add-on Transaction
    Add-on-Transaction:
    Acquisition of further companies or Shares by an Investor subsequent to an already completed investment, aiming at additional appreciation through the Synergy among these investments. See also Buy and Build
    Administrador Concursal:
    person appointed by a Spanish Insolvency court to either supervise or fully manage an insolvent company. In most Insolvencies there must be three administrators: (i) a lawyer; (ii) an auditor or economist; and (iii) a creditor holding an ordinary or non-secured generally privileged claim. For more information on Spanish Insolvency, see Latham & Watkins Client Alert No. 872, “Spanish Insolvency Act Changes — Paving the Way for Restructurings”(29 May 2009), available at www.lw.com.
    Administration:
    a formal Insolvency process in England and Wales designed to facilitate the Rescue of an insolvent company or achieve a better return to creditors than if the company immediately went into Liquidation. Administration involves the control of the company passing from the directors to an Administrator and a Moratorium on most secured and unsecured claims. The procedure has gained notoriety through the use of Pre-Packs.
    Administrator:
    a licensed Insolvency practitioner in England and Wales (usually an accountant) who is appointed by the court, the company’s directors, or by certain qualifying secured parties for the purposes of Administration
    Admission and Disclosure Standards:
    the rules, published by the UKLA, containing the admission requirements and the ongoing disclosure requirements which companies with Securities must observe if admitted to trading on the LSE markets. The rules do not apply (with the exception of Disclosure and Transparency Rule 5 for UK incorporated and controlled companies) to companies admitted to AIM.
    ADR:
    acronym for American Depositary Receipt
    ADS:
    acronym for American Depositary Share
    Advance Notice Bylaw:

    a bylaw requiring a stockholder who intends to make a motion or nominate a candidate for the Board of Directors at a Shareholders’ Meeting to provide the company with notice a specified time prior to the Shareholders’ Meeting and usually requiring the shareholder to supply information about the proponent and candidate

    1. (US) Advance Notice Bylaws apply to proposals other than those brought pursuant to SEC Rule 14a-8. They are considered an important defensive mechanism in the context of actual or threatened Proxy Contests, and a stockholder’s failure to comply with all of the conditions of an Advance Notice Bylaw, at least in theory, would allow the company to disregard the motion or nomination. For that reason, a claim by a company of failure to comply will often provoke litigation testing both the facts and the underlying validity of the Advance Notice Bylaw as a matter of state corporation law.
    Advisory Board:
    a body that advises the Management of a corporation
    Advisory Council or Majilis Al Shura:
    a 35-member body whose function is both supervisory and legislative. No legislation may be passed in Qatar without first receiving approval from the Advisory Council, which acts as an advisory body to the Emir of Qatar.
    ADX:
    Abu Dhabi Securities Exchange
    Affiliate:

    defined slightly differently in different types of agreements, but generally refers to a subsidiary, corporation, Partnership, or other person controlling, controlled by or under common control with another entity

    1. (US) a commonly used term in the Securities Act, the Exchange Act and SEC regulations
    2. (UK and HKG) no definition commonly used, except that the term will often describe an entity wider than a direct subsidiary/Holding Company definition to include additional members of a group under common control
    3. (DEU) any affiliated entities (Verbundene(s) Unternehmen) within the meaning of secs. 15 et. seq. of the German Stock Corporation Act
    4. (ESP) a commonly used term in the Spanish Corporations Act, especially for consolidation purposes
    5. (FRA) a commonly used term in France, but with no legal definition
    6. (RUS) defined by law as an individual or a company de facto or de jure controlled by, controlling or under common control with another entity; the criteria based on which persons may be Affiliates are limited to those outlined in the current legislation
    7. (SGP) see Related Corporation
    8. (UAE) concept is used in agreements, but not defined in legislation
    Affirmative Covenant:
    an agreement to do something
    AGCM:
    acronym for Autorità Garante della Concorrenza e del Mercato
    Agio:
    an additional amount paid on the nominal value, which has to be paid at the issuance of Shares
    AGM:
    acronym for Annual General Meeting
    Agreed Takeover:
    see Friendly Takeover
    AIM:
    originally known as the Alternative Investment Market and abbreviated as AIM, this UK stock market is operated by the London Stock Exchange and is now known simply as AIM. It provides a lighter regulatory environment than the Main Market of the LSE, and so enables smaller and growing companies to access the public market.
    AIM Rules:
    may refer to the AIM Rules for Companies or the AIM Rules for Nominated Advisers
    AIM Rules for Companies:
    means the rules published by the London Stock Exchange for companies whose Securities are traded on AIM
    AIM Rules for Nominated Advisors:
    means the rules published by the London Stock Exchange for Nominated Advisers of companies whose Securities are traded on AIM
    AJD:
    acronym for Actos Jurídicos Documentados, the Spanish version of Stamp Duty
    All or Substantially All:

    this phrase is used in contractual provisions and corporate statutes, but the precise meaning is the subject of much debate (and litigation). It does not necessarily mean what it sounds like in general layman’s terms. In general Substantially All means more than 50 percent, but how much more and what categories should be measured to determine whether the event fits the phrase (e.g., assets, revenues, profits) are critical issues. Another critical issue is how to measure the object of the qualifying phrase, e.g., assets. Should the assets be measured in terms of value, revenue producing capability, profit producing capability or some other attribute? Similar issues abound in the measurement of revenues (e.g., over what period, on a cash or an Accrual basis, etc.)

    1. (US) see, e.g., Sharon Steel Corp. v. Chase Manhattan Bank, N.A., 691 F.2d 1039 (2d Cir. 1982);  B.S.F. Co. v. Phila. Nat’l Bank, 204 A.2d 746 (Del. 1964); Hollinger Inc. v. Hollinger Intern'l, Inc., 858 A.2 342 (Del. 2004).
    Allotment:
    1. (UK and HKG) means the unconditional right of a party to be included on a UK or Hong Kong company’s register of members, and occurring in advance of the issuance of such Shares to the party
    2. (SGP) means the appropriation to a person of a certain number of Shares, though not necessarily specific Shares. A Share is said to be issued when a shareholder is put in control of the Shares allotted to him.
    Alternative Dispute Resolution:
    collective term for the ways that parties can settle disputes short of litigation, most often with the help of a third party (e.g., mediation, negotiations, Arbitration etc.)
    Amalgamation:
    see Merger and Scheme of Arrangement
    Amendement Carrez:
    see Carrez Amendement
    Amendement Charasse:
    see Charasse Amendement
    American Depositary Receipt:
    an issuance of negotiable certificates that represent Securities of a non-US company that trade in the US financial markets, with each individual Share referred to as an American Depositary Share. See also ADR and ADS.
    American Depositary Shares:
    negotiable certificates that represent Securities of a non-US company that trade in the US financial markets, with the entire issuance of American Depositary Shares referred to as American Depositary Receipt. See also ADS and ADR.
    American Style Option:
    a type of Option where the holder can exercise the Option at any time
    AMF:
    acronym for the French Autorité des Marchés Financiers
    AML:
    acronym for Anti-Money Laundering. Same as Know Your Client or KYC.
    Amortization:
    in accounting, the expensing of the cost of the Acquisition of assets over the expected life of the asset
    Angel Investor:
    an Investor (usually an individual as opposed to a firm) that provides capital for a business Start-Up, usually in exchange for equity ownership. Think “Shark Tank” or “Dragons Den,” a series of reality television programs broadcast internationally featuring entrepreneurs pitching their business ideas in order to secure investment finance from a panel of Angel Investors/Venture Capitalists (the eponymous “sharks” and “dragons”).
    Annual General Meeting:

    means a general meeting of company’s shareholders commonly called in order to approve the company’s annual accounts. In the case of a Public Company, an Annual General Meeting is required to be called by law.

    1. (FRA) an Annual General Meeting is required to be called by law for any form of company, either public or not, within six months of the fiscal year-end, in order to approve the company’s annual accounts
    Antecedent Transaction:
    see Reviewable Transaction
    Anti-Assignment Provision:
    see Assignment Provision
    Anti-Competitive:
    when a potential Business Combination would prevent or reduce competition in the market; such a deal is unlikely to receive Merger Clearance
    Anti-Dilution Provision:
    a provision in a company’s contract or constituent document that is designed to protect (in a specified fashion) the holder of a Class or series of equity Security from having the holder’s Equity Interest in the company reduced or diluted by issuances of other Securities or dividends. There are a variety of common types of Anti-Dilution Provisions, so it is important to understand precisely which type of Anti-Dilution Provision is intended to be utilized in the specific circumstance.
    Anti-Money Laundering:
    see AML, Know Your Client and KYC
    Anti-Sandbagging:
    a provision in an Acquisition Agreement that limits or eliminates a Seller’s liability for inaccuracies in Representations and Warranties of which the Buyer had knowledge before Closing
    Anti-Takeover Laws:

    a generic reference to state or national statutes, as applicable, that impede or preclude Hostile Takeovers

    1. (US) there have been several US Supreme Court cases dealing with whether various types of state Anti-Takeover Laws are pre-empted by the federal Takeover statute and rules. As a practical matter, state Anti-Takeover Laws have virtually no practical impact, because the universality of the Poison Pill precludes Closing on Unilateral Takeovers. Accordingly, Hostile deals invariably end either by being dropped by the Hostile Bidder or by becoming negotiated deals, in which case the Target Company Board will be required to waive the provisions of any applicable Anti-Takeover Law.
    2. (SGP) see Frustrating Action
    Antitrust Clearance:
    see Merger Clearance
    Anti-Trust Clearance:
    see Merger Clearance
    Any and All Bid:
    see Any and All Offer
    Any and All Offer:
    a Tender Offer or Exchange Offer for all outstanding common Shares of a Target Company
    APA:
    acronym for Asset Purchase Agreement
    Apostille:
    a certificate issued pursuant to the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (the Convention), which facilitates the circulation of public documents between state parties. The Apostille replaces the cumbersome and often costly formalities of a full legalisation process with the mere issuance of a certificate. Instead of legalisation by the appropriate embassy, the notary’s certificate and seal are certified as genuine by the competent authority of the state on whose territory the document has been executed. The Convention applies to public documents (such as a notarial act or a document with notarial authentication of signatures) executed in one state party to the Convention and to be used in another state party to the Convention. So now you know.
    Appraisal:
    a process for the judicial determination of the fair value of Shares, in jurisdictions for which Appraisal Rights are asserted
    Appraisal Rights:

    rights provided by statutes that permit shareholders of Target Companies in certain types of Acquisitions to decline receipt of the Merger Consideration and in lieu thereof to sue in court to receive a judicially determined value for Shares of the Target Company. Exercise of Appraisal Rights usually requires strict adherence to statutory requirements.

    1. (US) in practice, shareholders historically have rarely availed themselves of Appraisal Rights because of the procedural hurdles to assertion in an Appraisal proceeding and because of the costs, uncertainties and time involved to complete litigation. However, the historical trend is changing
    Arbitrage:
    profiting by trading on price disparities involving the same item, similar items or fungible items. One type of Arbitrage involves capturing a difference in price for the same item in different markets (e.g., if a Common Stock is traded on both the NYSE and the LSE and does so at slightly different prices, an Arbitrageur can buy Stock in the cheaper market and sell the same amount of Stock in the other, pocketing the difference). See also Risk Arbitrage and Merger Arbitrage.
    Arbitrageur:
    a person or entity that engages in Arbitrage
    Arbitration:
    a form of Alternative Dispute Resolution outside of litigation, where the parties to a dispute refer it to one or more persons (often experts in a specific field) by whose decision they agree in advance to be bound
    Arbitration Provision:
    a provision in an agreement according to which the parties agree to resolve their disputes arising from or in connection with the agreement through Arbitration
    Article 68 Company:
    a company incorporated under article 68 of the Commercial Companies Law of Qatar. An Article 68 Company has the ability to opt out of provisions of the Commercial Companies Law of Qatar. A key pre-requisite for the incorporation of an Article 68 Company is that one of its founding shareholders must be an entity owned at least 51 percent by the government of Qatar.
    Articles of Association:
    see Charter and Bylaws
    Articles of Incorporation:
    see Charter
    ASAP:
    as soon as possible. Usually heard in connection with the time required to Closing.
    Asset Acquisition:

    a Combination effected through the Acquisition of assets from a Target Company. In most jurisdictions, an Asset Acquisition typically also involves an assumption of certain liabilities; however, because the parties can bargain over which assets will be acquired and which liabilities will be assumed, the transaction form can be far more flexible in its structure and outcome than a Merger, Combination or Stock Purchase. See also Asset Purchase Agreement and 363 Sale.

    1. (HKG) in the Hong Kong context, consideration should be given as to whether an Asset Acquisition may constitute a business acquisition — in which case the Transfer of Businesses (Protection of Creditors) Ordinance applies
    Asset Acquisition Agreement:
    see Asset Purchase Agreement
    Asset Deal:
    see Asset Acquisition
    Asset Purchase Agreement:

    an Acquisition Agreement providing for the Acquisition of a specified part or all of a Target Company’s or Seller’s assets, sometimes accompanied by an assumption of a specified part or all of a Target Company’s liabilities. Asset purchases allow the Buyer to not acquire certain assets of the Target Company. See also Asset Acquisition.

    1. (US) often used for various commercial reasons in M&A transactions, but very commonly used in Carve-Out Transactions, 363 Sales or other distressed M&A transactions
    2. (UK) often used for various commercial reasons in M&A transactions, but very commonly used in pre-Administration or Pre-Pack and other distressed M&A transactions
    Asset Stripping:
    a term describing the purchase of a business with the intention of breaking it up (rather than running it) because its NAV is greater than the purchase price. In some contexts Asset Stripping is something of a pejorative term.
    Assets Under Management:
    the total sum of funds acquired and administered by a Private Equity firm
    Assignment:

    a transfer of rights and, if possible, obligations under a contract (e.g., a Credit Agreement to a new Lender)

    1. (UK and HKG) under English/Hong Kong law, while you can assign rights, you are not able to assign obligations (see therefore Assignment and Assumption and also Novation)
    2. (FRA) under French law, while you can assign rights, you are not able to assign obligations (see therefore Assignment and Assumption and also Novation). Called délégation under French law.
    3. (ITA) under Italian law an Assignment of obligations does not generally imply the release of the transferor, absent consent from the transferred party
    Assignment and Assumption:

    when rights are transferred and the assuming party (e.g., a new Lender) also assumes the obligations of the transferor (e.g., old Lender), which is then released from those obligations

    1. (UK and HKG) when an Assignment does not work due to the inability under English/Hong Kong law to assign obligations, and/or where a Novation is not practicable due to loss of Security implications, English/Hong Kong law uses an Assignment and Assumption
    2. (FRA) under French law, called a délégation parfaite
    3. (ITA) under Italian law an Assignment of obligations does not generally imply the release of the transferor, absent consent from the transferred party
    Assignment Provision:
    a provision in a contract specifying under what terms and conditions the contract may be assigned for some or all purposes by a party to another entity or person. Assignments may be entire, or may be limited — as in an Assignment of payment streams or (except in Hong Kong) an Assignment of obligations. Sometimes called an Anti-Assignment Provision if it specifies that the contract may not be assigned (or may not be assigned except under specified circumstances) to another party for all or certain purposes.
    Assumed Liabilities:
    liabilities assumed by a Buyer in connection with an Asset Acquisition
    Asymmetrical Collar:
    when used to describe Exchange Ratio Collars, means Collars that deviate from the reference value or reference ratio by different amounts or percentages. So what goes up does not always come down in the same proportion or vice-versa.
    Auction:

    a generic term used to describe a process for selling a Target Company or the assets of a Seller. The process involves at least two Bidders making Bids in competition with one another. There are no settled rules for an Auction, but two patterns are most common: (1) a controlled, limited, private, or Quiet Auction in which a limited number of parties are invited to participate and the process is almost always intended to be confidential; and (2) a Widespread Auction or Public Auction in which a larger number of parties are invited to participate, sometimes by what amounts to a public notice of the Auction Process. 

    Auctions typically involve separate stages at the end of which Bidders are asked to make specified submissions in order to proceed to the next stage. For instance, a preliminary Indication of Interest or Preliminary Offer (including a specified value or range of values) might be required by a set date for a Bidder to gain full access to Due Diligence materials, and a final Bid or Best and Final Bid (with a set value, detailed Purchase Agreement mark-up and Committed Financing, if necessary) might be required to be submitted by a Bid Deadline in order to negotiate with the Seller or Target Company.

    Auction Draft:
    the Acquisition Agreement provided by a Seller (or Target Company) to potential Bidders in connection with an Auction
    Auction Process:
    see Auction
    Authorised Person:
    1. (UK) a person who is authorised for the purposes of FSMA to carry out regulated activity
    2. (HKG) a person who is authorised for the purposes of the SFO to carry out a regulated activity
    Authorized Share Capital:

    is the maximum Par Value of Shares that a company may legally issue

    1. (HKG) the concept of Authorized Share Capital for Hong Kong-incorporated companies will be abolished once the new Companies Ordinance comes into operation (expected in 2014)
    Autorità Garante della Concorrenza e del Mercato:
    the Italian competition commission. See Competition Commission.
    Autorité de la Concurrence:
    the French competition authority. See Competition Commission.
    Autorité des Marchés Financiers:
    the French financial market authority
 
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