APA- Asset Purchase Agreement
An asset purchase agreement (APA) is a definitive agreement that finalizes all terms and conditions related to the purchase and sale of a company's assets.
A buyout is a transaction by which one party purchases shares of a business to acquire a controlling interest in that company. A buyout occurs when the purchaser believes a firm is undervalued and can become better valued under the purchaser’s ownership. Buyouts are commonly used to describe an acquisition by private equity firms where they obtain a controlling ownership of the business rather than just providing growth equity to the exisiting ownership group.
CapEx- Capital Expenditures
Capital expenditure or capex is the use of corporate funds and/or assumption of liabilities to purchase capital assets that will be used for productive purposes over an extended period of time.
CIM- Confidential Information Memorandum
A confidential information memorandum (CIM) is a document drafted by an M&A advisory firm or investment banker used in a sell-side engagement to market a business to prospective buyers. A CIM, also referred to as the "book", "overview package" or "executive summary" and will typically include the following: •A detailed description of the business and its operations; •A summary of the industry and opportunities within the market; •Financial information including analysis of historical results and future projections; and •A summary of the auction process including the proposed structure of the deal and timing for receipts of expressions of interest or letters of intent.
Earnings before Interest and Taxes
Earnings before Interest, Taxes, Depreciation and Amortization
Earnings before Interest, Taxes, Depreciation, Amortization and Management Fees
End of Business
Fixture, Furnishings and Equipment
(also called expansion capital and growth equity) is a type of private equity investment, usually a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business.[
IOI- Indication of Interest
is an expression in finance that demonstrates a buyer's non-binding interest in buying a security in the stock market, often before it is available for purchase.[
Internal Rate of Return
LOI- Letter of Intent
Used in most major business transactions, a letter of intent (LOI) outlines the terms of a deal and serves as an agreement to agree between two parties. An LOI is similar to a "term sheet" in it's content, but differs in structure, (one formatted as a letter, another as a list of terms). Used in most major business transactions, a letter of intent (LOI) outlines the terms of a deal and serves as an agreement to agree between two parties. An LOI is similar to a term sheet in it's content, but differs in structure, (one formatted as a letter, another as a list of terms).
Mezzanine is junior debt that resides between the senior debt and equity on the balance sheet, hence the name mezzanine, a word that evolved from the Latin for “in the middle”. Well, in this case the dictionary definition only tells half the story. The truth is mezzanine capital has grown to mean much more than just subordinated debt as it now includes both preferred and common equity as well as more engineered securities such as convertible debentures.
MOU- Memorandum of Understanding
A legal document outlining the terms and details of an agreement between parties, including each parties requirements and responsibilities. The MOU is often the first stage in the formation of a formal contract. An MOU is far more formal then a handshake and is given weight in a court of law should one party fail to meet the obligations of the memorandum.
A “recap” is a catch-all term for transactions in which the company’s balance sheet is being meaningfully restructured, generally to better match the assets and liabilities of the company or to provide liquidity for some special purpose. This usually includes resetting all credit facilities, often replacing existing lenders with new ones. In a recap, a mezzanine provider usually provides a tranche of subordinated debt and quite often a round of equity, either preferred or common, to augment the company’s capital base.
A strategic acquisition is the purchase of a business, division, product line or facility by a company to expand its competitive footprint. A mezzanine provider in these deals provides the capital to complete the purchase, which may be all subordinated debt or equity or a combination thereof, depending upon the funding requirement and the other financial resources of the acquirer.
is the measure of a company’s liquidity. You must understand your company’s working capital needs before you sell. Work with your financial advisors to determine exactly what the business needs to operate and what capital is excess. By clearly delineating the difference between working and excess capital, you’ll better understand your company’s valuation. You’ll also be able to spell out everything in the letter of intent and in the contract.