Welcome to the Jargon Buster. We understand that navigating the world of mergers and acquisitions can be tough. That’s why we’ve created this blog post to walk you through the most commonly used business and legal terms often encountered in the structuring, negotiation, and execution of an M&A deal.
Accountability Chart
A chart that outlines key roles and responsibilities in your organization, focused on functions rather than job titles. It helps clarify who is responsible for what, which is critical when preparing for growth or a sale.
Bottom Line
The net profit your company makes after deducting all expenses, taxes, and costs. It’s the final number on your income statement.
Business Valuation
An analysis to estimate how much your company is worth. It considers both financial data and intangible factors like client relationships or brand reputation. It’s essential when preparing to sell or attract investors.
C-level Executives
Senior leaders in your company responsible for strategic decisions, such as the CEO, Managing Director, or Head of Operations.
Cash Flow
The amount of money coming in and going out of your business during a specific time. Positive cash flow means you have more money coming in than going out—a sign of good financial health.
Change Management
The process of helping your team adapt to new ways of working—whether due to growth, tech adoption, or a merger. It ensures changes are implemented smoothly and effectively.
Client Dependence
When one or a few clients make up a large share of your revenue. This is a risk for buyers because losing a key client could destabilize the business.
Closing
The final stage of an M&A deal when ownership of the company officially changes hands.
Corporate Governance
The systems and rules that guide how a company is run. Good governance builds trust and is attractive to buyers or investors.
Due Diligence
A detailed review and analysis of your company by a potential buyer. It verifies your numbers, operations, and risks before a deal is finalized.
Earn-out
A portion of the sale price that is paid later, based on your company hitting certain performance goals after the sale.
EBITDA
Short for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a common way to measure your company’s profitability before financial or accounting adjustments.
Escrow
A portion of the sale price held by a neutral third party after the deal closes. It protects the buyer in case there are post-sale issues.
Feedback & Improvement Loop
A process of using feedback from clients or staff to keep improving services and operations. It helps your company stay competitive.
Finder’s Agreement
A formal agreement with an M&A advisor or broker. It outlines the services they’ll provide in finding a buyer or seller for your company.
Gap Analysis
A method to compare where your business is today with where you want it to be. It’s used to spot areas for improvement before selling or scaling.
Growing Inorganically
Expanding your business by acquiring or merging with another company, rather than growing through new clients or services alone.
KPIs (Key Performance Indicators)
Metrics used to measure the performance of your business, such as revenue growth, profit margins, or client retention.
Letter of Intent (LOI)
A non-binding document that outlines the main terms of a potential deal before the final contract is negotiated.
Post-merger Integration
The process of combining teams, systems, and operations after a deal closes. A good integration plan helps ensure the success of the merger.
Premiumization
A strategy to raise your prices by offering higher-value services or a stronger brand experience.
Value Creation
When your business generates results—financial or strategic—that go beyond just making a profit. It’s what makes your company more attractive to buyers.
