Breakup Fee
- Definition: A penalty paid by the acquirer to the target company if the acquirer backs out of a deal or the deal falls through.
- Synonyms: Termination Fee, Cancellation Penalty, Kill Fee
- Search Phrase: “penalty for failed acquisition deal”
- Part of Speech: Noun Phrase
- Use in a Sentence: “The merger agreement included a hefty breakup fee to ensure commitment.”
Drag-Along Right
- Definition: A right that allows majority shareholders to force minority shareholders to join in the sale of a company.
- Synonyms: Compulsory Sale Right, Majority Rule Right, Co-Sale Requirement
- Search Phrase: “majority forces minority in company sale”
- Part of Speech: Noun Phrase
- Use in a Sentence: “The majority shareholder exercised their drag-along right during the company’s sale.”
Earnout
- Definition: A contractual provision stating that the seller of a business may receive additional compensation tied to the business’s future performance.
- Synonyms: Performance Earnout, Deferred Payment, Contingent Payment
- Search Phrase: “extra seller payment after business sale”
- Part of Speech: Noun
- Use in a Sentence: “The acquisition deal included an earnout based on next year’s profits.”
Fairness Opinion
- Definition: An assessment by an independent expert about whether the terms of a transaction are fair from a financial point of view.
- Synonyms: Fairness Assessment, Valuation Opinion, Transaction Evaluation
- Search Phrase: “independent review of M&A deal fairness”
- Part of Speech: Noun Phrase
- Use in a Sentence: “Before finalizing the deal, they sought a fairness opinion from an external auditor.
Golden Parachute
- Definition: Large financial compensation guaranteed to a company executive if they are dismissed or lose their job due to a merger or takeover.
- Synonyms: Severance Package, Exit Bonus, Termination Benefit
- Search Phrase: “executive payout after company takeover”
- Part of Speech: Noun Phrase
- Use in a Sentence: “The CEO received a golden parachute after the hostile takeover.”
Goodwill
- Definition: An intangible asset that arises when a business is purchased for more than the fair market value of its net assets.
- Synonyms: Intangible Value, Brand Value, Business Reputation
- Search Phrase: “extra value in company acquisition”
- Part of Speech: Noun
- Use in a Sentence: “The accounting books showed substantial goodwill from the recent merger.”
Leveraged Buyout (LBO)
- Definition: An acquisition of a company using a significant amount of borrowed money to meet the acquisition cost.
- Synonyms: Buyout Leverage, Debt-Financed Acquisition, Hostile Takeover
- Search Phrase: “company buyout using lots of debt”
- Part of Speech: Noun Phrase
- Use in a Sentence: “The private equity firm completed a leveraged buyout of the struggling company.”
Reverse Merger
- Definition: A transaction where a private company becomes public by acquiring a smaller public company.
- Synonyms: Reverse Takeover, Backdoor Listing, Inversion
- Search Phrase: “private firm goes public by buying smaller firm”
- Part of Speech: Noun Phrase
- Use in a Sentence: “The startup went public through a reverse merger with a dormant company.”
Working Capital
- Definition: The capital of a business used in its day-to-day trading operations, calculated as current assets minus current liabilities.
- Synonyms: Operational Capital, Net Current Assets, Operating Liquidity
- Search Phrase: “daily business operational funds calculation”
- Part of Speech: Noun Phrase
- Use in a Sentence: “They had to increase their working capital to improve cash flow.”
