The glossary every M&A expert should know. Over 200 terms and definitions to speak with confidence and to gain a better understanding of the inherent complexity of mergers and acquisitions.
Our goal is to make Matactic your go-to tool for learning or recalling specialized M&A vocabulary. Explore our entries—we’ll be continuously adding new words and concepts.
Title insurance is a type of insurance that protects property buyers and lenders from financial loss due to defects or issues with the title of a property. These issues can include undiscovered liens, claims of ownership, fraud, or disputes over property boundaries. By securing title insurance, we ensure that our investment in real estate is protected from unforeseen title problems that could jeopardize our ownership.
A go-private merger is a transaction in which a publicly traded company is taken private, often by its management or a private equity firm. In this process, shares of the company are bought back from shareholders, thereby delisting the company from public stock exchanges. This approach is typically pursued to allow the company to operate with greater flexibility and to implement long-term strategies without the pressures of quarterly earnings reports.
A take-private bid is an offer made by a group, often led by private equity firms, to purchase all outstanding shares of a public company, effectively transforming it from publicly traded to privately held. In essence, it involves the buyer negotiating to acquire all shares, typically at a substantial premium, to gain full control and remove the scrutiny and obligations that come with being a public entity.
Disclosure schedules are documents that accompany a purchase agreement in a merger or acquisition deal, detailing specific facts, figures, and representations that the seller must affirm. They serve to provide transparency about the target company’s legal, financial, and operational conditions, ultimately protecting both parties by clarifying potential liabilities and obligations.
A transitional service agreement (TSA) is a contract that outlines the terms under which one party provides services to another for a specified period following a merger or acquisition. This agreement is crucial for ensuring a seamless transition as it often covers support in areas such as IT systems, HR functions, and other operational aspects that need to be aligned post-transaction. In simple terms, a TSA helps both parties maintain business continuity and stability during a time of change.
Credit committee approval refers to the formal consent required from a designated group within an organization, typically within financial institutions, that oversees and evaluates credit risk and lending decisions. This committee plays a crucial role in assessing loan applications, ensuring that they align with the organization’s risk management policies and credit guidelines. By obtaining this approval, companies can proceed with transactions that entail significant financial commitments while also safeguarding their financial health.
The term “successors and assigns” refers to the parties who will inherit or take over the rights, duties, and obligations specified in a contract or agreement. It is commonly employed in legal documents to ensure that obligations and rights are transferable and extend beyond the original parties involved. Essentially, when we mention successors and assigns, we underscore the idea that the agreement remains intact even if the parties change due to various circumstances, like mergers, acquisitions, or ownership changes.
A deal announcement is a formal communication that notifies stakeholders about a significant business transaction, such as a merger, acquisition, or partnership. These announcements typically outline essential details, including the parties involved, the valuation, and strategic intentions behind the transaction. It serves as a pivotal moment that signals a new chapter for the companies involved and provides transparency for investors, employees, and the market at large.
A golden parachute is a financial arrangement that offers lucrative benefits, usually in the form of severance packages, to executives who leave a company as part of a merger, acquisition, or takeover. These packages often include substantial cash payouts, stock options, and other perks that ensure the departing executive is financially protected despite the changes in ownership or company structure. Essentially, a golden parachute is designed to incentivize top management while also providing them with a safety net during volatile transitions.
Board approval is the formal consent given by a company’s board of directors concerning significant decisions, such as mergers and acquisitions. This process involves evaluating proposals, assessing potential risks and benefits, and ultimately deciding whether to move forward with a transaction. Board approval is crucial as it ensures that key stakeholders are aligned and that strategic objectives are met, safeguarding the company’s interests in complex negotiations.