Plain-language definitions of common terms used in mergers, acquisitions, and business transitions.
Acquirer
The company or individual purchasing a business or stake in a business.
Asset Sale
A transaction where specific assets of a business are sold rather than the shares of the company. The legal entity remains with the seller.
Blind Teaser
An anonymised one-page summary of a business available for sale, shared with potential buyers before an NDA is signed. Contains no identifying information.
Buy Mandate
An engagement where an advisor represents a buyer seeking to acquire a business matching specific criteria.
Capital Gains
The profit earned from the sale of a capital asset such as shares or business assets. Subject to taxation under the Income Tax Act.
Due Diligence
The process by which a potential buyer investigates a target business before completing a transaction. Covers financial, legal, operational, and tax aspects.
EBITDA
Earnings Before Interest, Tax, Depreciation and Amortisation. A proxy for operating cash flow used widely in business valuation.
EV (Enterprise Value)
The total value of a business, including equity and debt, minus cash. The most common metric for M&A pricing.
Earnout
A portion of the deal consideration paid to the seller after closing, contingent on the business achieving agreed performance targets.
Information Memorandum (IM)
A detailed confidential document prepared by the seller's advisor describing the business, its financials, operations, and growth prospects. Shared with qualified buyers post-NDA.
JV (Joint Venture)
A business arrangement where two or more parties agree to pool resources for a specific project or ongoing business, while remaining independent entities.
LOI (Letter of Intent)
A non-binding document expressing a buyer's intention to acquire a business on stated terms. Precedes the definitive agreement.
NDA (Non-Disclosure Agreement)
A legal contract requiring parties to keep shared information confidential. Signed before sensitive business information is disclosed in an M&A process.
Promoter
In the Indian context, the founder or controlling shareholder of a business. Often the seller in an M&A transaction.
Share Sale
A transaction where the shares of the company are sold, transferring ownership of the legal entity including all its assets and liabilities.
Slump Sale
The transfer of a business undertaking as a going concern for a lump sum consideration, without assigning individual values to assets and liabilities. Governed by Section 50B of the Income Tax Act.
Succession Planning
The process of transferring ownership and management of a business to the next generation or an external buyer, often a key driver of M&A activity in Indian family businesses.
Term Sheet
A non-binding document outlining the key commercial terms of a proposed transaction. Basis for drafting the definitive agreement.
Valuation
The process of determining the economic value of a business or asset. Common methods include DCF, EV/EBITDA multiples, and asset-based valuation.
Working Capital
The difference between a company's current assets and current liabilities. A key consideration in deal structuring and price adjustments at closing.
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