| A |
| M&A Term | Definition | Note |
| A/B Capital Structure | see High Vote/Low Vote | N1 |
| A/B Structure | see High Vote/Low Vote | N1 |
| AAA | Highest rating assigned by a number of credit rating agencies, indicating the relative security of an issuer of debt. Usually accorded to quasi government and large multinational corporate borrowers. | N6 |
| ABI | acronym for Association of British Insurers, the UK’s leading shareholder group. ABI is the industry body which represents the general insurance, investment and long-term savings industry. ABI liaises with the government, regulators and UK, EU and international policy makers. | N1 |
| Above the Line | refers to items on an Income Statement (or Profit and Loss Statement) which are incurred before the calculation of a company’s gross profit. Above the Line profit is gross operating profit before deduction of certain expenses to give net profit. | N1 |
| Above the Line Cost and Revenue | Cost and revenue elements that are included in the calculation of EBITDA | N3 |
| ABS | Asset Backed Securities. | N2 |
| Absolute Return Vehicles/Strategies | Investment strategies targeting a positive return in absolute terms rather than relative to an index or other benchmark. These strategies avoid construction limitations imposed by the measurement against a specific benchmark. Often also referred to as cash plus funds. (See also hedge fund.) | N6 |
| Acceleration | the end of the line in the Bond and loan world. The definitions of “Default” and “Event of Default” describe how we get there. Following an Event of Default, the bondholders (in accordance with the Terms and Conditions or the Indenture) or Lenders (under a Credit Agreement) have the right to “accelerate” the Due Date of their debts; in other words, they have the right to declare their Bonds or loans immediately due and payable. Note that practice in the US (and in European Indentures) is for Insolvency Events of Default to automatically lead to Acceleration, however this is uncommon in European bank financings. Note that Acceleration can lead to an obligation on the officers of the Issuer/Borrower to file for Insolvency, thereby precluding the ability to agree a consensual out-of-court Restructuring. | N1 |
| Accordo di Ristrutturazione | a pre-Insolvency Restructuring agreement under Article 182-bis of the Italian bankruptcy law. Filings bring about a stay on creditor action for 60 days, and the company can obtain an immediate stay preceding the agreement in certain circumstances. Must be supported by a report by an independent auditor attesting the agreement’s feasibility and suitability to allow payment of all external creditors, and requires the approval of 60 percent of the creditors (by value). Must be homologated, or officially approved, by the bankruptcy court. | N1 |
| Account Earnings | The amount of money a company has earned during a given period, usually a quarter or year, as reported based on proper accounting standards. Accounting earnings help to measure a company’s profitability, but investors should consider not just earnings quantity, but also earnings quality, in evaluating a company’s accounting earnings. Earnings quality considers whether earnings are repeatable, controllable and bankable | N3 |
| Accounting Policies | Accounting policies are the specific policies and procedures used by a company to prepare its financial statements. These include any methods, measurement systems and procedures for presenting disclosures. Accounting policies differ from accounting principles in that the principles are the rules and the policies are a company’s way of adhering to the rules. | N3 |
| Accretion/Dilution Analysis | an analysis on a Pro Forma basis to illustrate whether a Business Combination will be Accretive or Dilutive to per Share attributes of the Buyer’s Common Stock, such as Earnings Per Share. An Accretion/Dilution Analysis may be performed on a historical Pro Forma basis (e.g., based on LTM data for the Buyer and the Seller) or on projected Pro Forma basis (e.g., based on NTM projections for the two parties). | N1 |
| Accretive | An acquisition is accretive when the combined earnings per share of the combined business is greater than the buyer’s standalone earnings per share. | N3 |
| Accretive | means that a Business Combination will result (usually measured on a Pro Forma basis) in an increase in a Buyer’s specified measure of financial performance, such as Earnings Per Share | N1 |
| Accrual/Accruals | in Financial Statements, expected income which is still to be received or expected expenses which are still to be incurred | N1 |
| Accrual/Accruals | Term used in accounting. Accruals are recognised when future revenue or liabilities become known, but before there is any actual exchange of funds. This enables companies to plan their finances with certainty. Accruals overlap with Provisions in the context of expected liabilities. | N2 |
| Accrued Benefits | Benefits that an employee has earned to date based on his or her membership of a pension scheme. Accrued benefits are often calculated in relation to the employee’s salary and completed service. | N6 |
| Accrued Interest | interest that has been earned by the Issuer or Borrower but that has not yet become due and payable (or which has been due but has not been paid) | N1 |
| Accrued Interest | Interest that has been earned but not yet received. The purchaser of a bond in the market pays the seller the value of the accrued interest, as the former will receive the full coupon when it is next paid. | N6 |
| Acid Test Ratio, aka Quick Ratio or Liquidity Ratio | a common financial ratio used to show the extent to which amounts which are due and payable within 12 months are covered by amounts received/receivable within the same time. The higher the figure, the better, as it shows increased liquidity (stock is excluded, so it is more relevant to cash availability). | N5 |
| AcquiCo | abbreviation for the Acquisition company | N1 |
| Acquired Person | another name for a Target Company or party selling assets or Securities in a Business Combination 1. (US) also a technical term under the Hart-Scott-Rodino Act referring to the Target Company or party selling assets or Securities in a Business Combination |
N1 |
| Acquiree or Target Company | The company which is being merged or taken over by the other company. | N3 |
| Acquirer | another name for a Bidder, Buyer or Purchaser | N1 |
| Acquirer Concept | Involves application of an acquirer’s restructuring plan by the insolvency administrator in the context of insolvency proceedings, which can include dismissing staff. | N2 |
| Acquirer, predator, offeror | The company which is making a bid for the merger or takeover of another company. | N3 |
| Acquisition | An acquisition is a corporate action in which a company buys ownership in a target company in order to assume control of the target firm. Acquisitions are often made as part of a company’s growth strategy whereby it is more beneficial to take over an existing firm’s operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company’s stock or a combination of both. | N3 |
| Acquisition | General term for all methods of acquiring an equity interest. | N2 |
| Acquisition | the purchase of assets or company shares. A buyer, bidder or purchaser is the entity that makes the purchase or the offer to purchase. The Target is the entity being purchased, or the entity in which a stake is being purchased. The Vendor is the entity that sells or disposes of the target entity | N5 |
| Acquisition | another name for a Business Combination or shorthand for an Acquisition of Securities or assets of another party | N1 |
| Acquisition Accounting | Acquisition accounting is a set of formal guidelines describing how assets, liabilities, non-controlling interest and goodwill of a target company must be reported by a purchasing company on its consolidated statement of financial position. With acquisition accounting, the fair market value of the acquired firm is allocated between the net tangible and intangible assets portion of the balance sheet of the acquiring firm; any difference is regarded as goodwill. Also called “business combination accounting”. | N3 |
| Acquisition Adjustment | The difference between the price an acquiring company pays to purchase a target company and the net original cost of the target utility company’s assets. An acquisition adjustment is the premium paid for acquiring a company more than its tangible assets or book value. | N3 |
| Acquisition Agreement | a generic name for any type of agreement that accomplishes a Business Combination or an Acquisition of Securities or assets of another party | N1 |
| Acquisition Consideration | the cash, Securities, or other assets paid by a Buyer in consideration for the Acquisition of a Target Company’s Shares or assets. Consideration can be structured many ways and not all the consideration is necessarily paid at Closing of the sale and purchase. Some portion of the agreed consideration may be deferred and paid at a later date (referred to as the Deferred Consideration), or the parties may agree to additional consideration being paid if certain triggers are met (referred to as “Additional Consideration,” Contingent Consideration or Earn Out depending on their nature). The consideration may also be adjusted to take into account changes between signing and Closing, sometimes referred to as an “Adjustment to Consideration” or Purchase Price Adjustment. | N1 |
| Acquisition Facility | a line of credit intended to be used to fund Acquisitions | N1 |
| Acquisition Finance | Financing a corporate acquisition through borrowing; the resulting Leverage Effect is aimed at generating a higher return on the capital employed (see also LBO). However, the higher proportion of debt capital also leads to increased risks for the company. | N2 |
| Acquisition Finance | a term used for the debt financing of the acquisition of a company. Administration: is a procedure under the insolvency laws. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. Administration can be voluntary (board-decided) and involuntary (court-decided) receivership. Involuntary administrative receivership, the administrator is appointed by the company directors. In involuntary administrative receivership, the administrator is appointed by a court. | N5 |
| Acquisition Financing | Acquisition financing is the capital that is obtained for the purpose of buying another business. Acquisition financing allows the user to meet their current acquisition aspirations by providing immediate resources that can be applied toward the transaction. | N3 |
| Acquisition Group | Group of companies to be acquired in the course of a transaction (see also Target Group). | N2 |
| Acquisition Line | see Acquisition Facility | N1 |
| Acquisition of Assets | Acquirer may purchase only assets or some specific assets and not all the assets and liabilities of the company. | N3 |
| Acquisition Premium | An Acquisition premium is the difference between the estimated real value of a company and the actual price paid to obtain it. Acquisition premium represents the increased cost of buying a target company during a merger and acquisition. There is no requirement that a company pay a premium for acquiring another company; depending on the situation, they may even get a discount. | N3 |
| Acquisition Proposal | an Offer by one party to acquire another party. Also called a Bid, if made pursuant to an Auction. | N1 |
| ACRA | Accounting and Corporate Regulatory Authority, which is the national regulator of business entities and public accountants in Singapore | N1 |
| Acrylic | a slang name for a Deal Toy or Tombstone | N1 |
| ACT | See Advance Corporation Tax. | N6 |
| Acting in Concert | Several parties acting by mutual agreement in relation to a Target; acting in concert can lead to voting rights being attributed, with the result that notification thresholds under capital markets law may be triggered. A mandatory offer may also become necessary under the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz – WpÜG). The question as to whether the parties are acting in concert is complex and often difficult to establish. | N2 |
| Acting In Concert | persons “Acting In Concert” comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal), cooperate, through the Acquisition of Shares in a company, by any one of them to obtain or consolidate effective control of that company 1. (US) see also Group 2. (UK) a defined term under the City Code (see Concert Party) 3. (DEU) a defined term under the German Securities Acquisition and Takeover Act 4. (ESP) two or more Investors/shareholders working together to achieve the same investment goal over a Spanish Listed Company and/or to acquire control over a Spanish Listed Company 5. (HKG) a defined term under the HK Takeovers Code. See Concert Party. 6. (ITA) a defined term under Article 101-bis of the Consolidated Financial Act and Article 44-quarter of Regulation no. 11971 of 1999 7. (RUS) activities formally or informally agreed upon between two or more parties (usually shareholders of a company) with the intention of acquiring or consolidating control over a company or certain market niche 8. (SGP) a defined term under the Singapore Takeover Code |
N1 |
| Action List | List in which all the (pending and completed) action items (together with deadlines and persons responsible) are recorded and updated (see also Procedure Plan). | N2 |
| Active Management | Approach to investment management which aims to outperform a particular market index or benchmark through asset allocation and/or selection decisions. (See also enhanced indexation, passive management.) | N6 |
| Active Position | Difference between the actual level of investment made in a particular stock or asset class and the benchmark allocation or weighting of that investment. | N6 |
| Active Return | Increase in the expected return on a portfolio from active management. | N6 |
| Active Risk | Risk measured in terms of volatility of a portfolio’s return compared with that of the benchmark return, arising from active management. Some level of active risk is necessary to achieve active return. (See also tracking error.) | N6 |
| Activism | Intervention by shareholders using their ownership rights to influence the actions of corporate management with a view to enhancing the value of the company. | N6 |
| Activist Investor | a generic term for Investors that amass blocks of Stock in a Target Company in order to persuade or help persuade the Target Company to change a fundamental aspect of its business, operations or Management (including voting against a proposed Business Combination supported by the Target Company) with the goal (in the eyes of the Activist Investor) of increasing the trading value of the Target Company’s Common Stock. Activism may range from private conversations with a Target Company’s senior Management or Board, to private or public letter writing campaigns, to Proxy Contests and other contests for control of the Target Company. See also Shareholder Activism. | N1 |
| Actuarial Assumption | Estimate made for the purposes of an actuarial valuation. Possible variables include life expectancy, return on investments, interest rates and growth in earnings. (See also actuarial valuation.) | N6 |
| Actuarial Valuation | Professional assessment undertaken by an actuary to determine whether the assets of a plan are likely to be sufficient to meet the accrued benefits; normally carried out at least every three years, in line with legislative requirements. | N6 |
| Actuary | Professional who advises on financial issues relating to risks, probabilities and mortality, most frequently in relation to the financing of pension plans and insurance companies. | N6 |
| Additional Voluntary Contributions (AVC) | Contributions over and above a member’s contractual contributions to a pension plan, enabling him or her to accrue additional benefits. | N6 |
| Add-on Acquisition | Acquisition of a company subsequent to an investment already made, with the aim of supplementing the original investment (“add-on”). From the investor’s point of view, there may be various reasons for such an acquisition, e.g. gaining new customers, boosting market share, exploiting synergy effects, etc. | N2 |
| Add-on Facility | agreement increasing the credit line under the acquisition financing agreements which will be made available at the time of the Add-on Transaction | N1 |
| Add-on-Transaction | Acquisition of further companies or Shares by an Investor subsequent to an already completed investment, aiming at additional appreciation through the Synergy among these investments. See also Buy and Build | N1 |
| Adjustable-rate Mortgage (ARM) | Mortgage loan whose interest rate is raised or lowered periodically in accordance with a stated reference interest rate. ARM refers both to the original homeowner loan and to a securitised pool of such loans. | N6 |
| Adjusted Book Value | An adjusted book value is a measure of a company’s valuation after liabilities, including off-balance sheet liabilities, and assets are adjusted to reflect true fair market value. The potential downside of using an adjusted book value is that a business could be worth more than its stated assets and/or liabilities because it fails to value intangible assets, account for discounts or factor in contingent liabilities. It is not often accepted as an accurate picture of a profitable company’s operating value, however it can be a way of capturing potential equity available in a firm. | N3 |
| Adjusted Earnings | The sum of earnings, increase in loss reserves, increase in new business, increase in deficiency reserves, increase in deferred tax liabilities, and capital gains for an insurance company from the previous time period to the current time period. Adjusted earnings provides a measurement of how current performance compares with performance in previous years. | N3 |
| Adjusted Net Asset Method | A business valuation procedure used in acquisition accounting that changes the stated values of a company’s assets and liabilities to reflect its current fair market values. This accounting technique adjusts asset and liability values either up or down, so they reflect the true values on either an ongoing concern, forced liquidation or orderly liquidation basis. | N3 |
| Adjusted Net Asset Value Method | a method within the Asset Approach whereby a business’ assets and liabilities (including off-balance sheet assets, Intangible Assets, and contingent assets and/or liabilities) are adjusted to market values or another appropriate Standard of Value. Also known as adjusted book value method or asset accumulation method. | N7 |
| Adjusted Present Value (APV) | a technique typically used to estimate the value of a levered business as the sum of the value of an unlevered business (i.e., 100% equity financed) and the value of the tax benefits associated with debt financing. | N7 |
| Administrador Concursal | person appointed by a Spanish Insolvency court to either supervise or fully manage an insolvent company. In most Insolvencies there must be three administrators: (i) a lawyer; (ii) an auditor or economist; and (iii) a creditor holding an ordinary or non-secured generally privileged claim. For more information on Spanish Insolvency, see Latham & Watkins Client Alert No. 872, “Spanish Insolvency Act Changes — Paving the Way for Restructurings” (29 May 2009), available at www.lw.com. | N1 |
| Administration | a formal Insolvency process in England and Wales designed to facilitate the Rescue of an insolvent company or achieve a better return to creditors than if the company immediately went into Liquidation. Administration involves the control of the company passing from the directors to an Administrator and a Moratorium on most secured and unsecured claims. The procedure has gained notoriety through the use of Pre-Packs. | N1 |
| Administrator | a licensed Insolvency practitioner in England and Wales (usually an accountant) who is appointed by the court, the company’s directors, or by certain qualifying secured parties for the purposes of Administration | N1 |
| Admission and Disclosure Standards | the rules, published by the UKLA, containing the admission requirements and the ongoing disclosure requirements which companies with Securities must observe if admitted to trading on the LSE markets. The rules do not apply (with the exception of Disclosure and Transparency Rule 5 for UK incorporated and controlled companies) to companies admitted to AIM. | N1 |
| ADR | acronym for American Depositary Receipt | N1 |
| ADS | acronym for American Depositary Share | N1 |
| Advance Corporation Tax (ACT) | Tax formerly paid by companies on dividends distributed to shareholders. | N6 |
| Advance Notice Bylaw | a bylaw requiring a stockholder who intends to make a motion or nominate a candidate for the Board of Directors at a Shareholders’ Meeting to provide the company with notice a specified time prior to the Shareholders’ Meeting and usually requiring the shareholder to supply information about the proponent and candidate 1. (US) Advance Notice Bylaws apply to proposals other than those brought pursuant to SEC Rule 14a-8. They are considered an important defensive mechanism in the context of actual or threatened Proxy Contests, and a stockholder’s failure to comply with all of the conditions of an Advance Notice Bylaw, at least in theory, would allow the company to disregard the motion or nomination. For that reason, a claim by a company of failure to comply will often provoke litigation testing both the facts and the underlying validity of the Advance Notice Bylaw as a matter of state corporation law. |
N1 |
| Advisory Board | Body established by a company to provide management with advice; not to be confused with the Supervisory Board. | N2 |
| Advisory Board | a body that advises the Management of a corporation | N1 |
| Advisory Council or Majilis Al Shura | a 35-member body whose function is both supervisory and legislative. No legislation may be passed in Qatar without first receiving approval from the Advisory Council, which acts as an advisory body to the Emir of Qatar. | N1 |
| ADX | Abu Dhabi Securities Exchange | N1 |
| Affiliate | Affiliated company; in German contracts often defined as an affiliated undertaking within the meaning of sections 15 et seq. of the German Stock Corporation Act (AktG). | N2 |
| Affiliate | defined slightly differently in different types of agreements, but generally refers to a subsidiary, corporation, Partnership, or other person controlling, controlled by or under common control with another entity 1. (US) a commonly used term in the Securities Act, the Exchange Act and SEC regulations 2. (UK and HKG) no definition commonly used, except that the term will often describe an entity wider than a direct subsidiary/Holding Company definition to include additional members of a group under common control 3. (DEU) any affiliated entities (Verbundene(s) Unternehmen) within the meaning of secs. 15 et. seq. of the German Stock Corporation Act 4. (ESP) a commonly used term in the Spanish Corporations Act, especially for consolidation purposes 5. (FRA) a commonly used term in France, but with no legal definition 6. (RUS) defined by law as an individual or a company de facto or de jure controlled by, controlling or under common control with another entity; the criteria based on which persons may be Affiliates are limited to those outlined in the current legislation 7. (SGP) see Related Corporation 8. (UAE) concept is used in agreements, but not defined in legislation |
N1 |
| Affirmative Covenant | an agreement to do something | N1 |
| After-tax Real Rate of Return | The after-tax real rate of return is the actual financial benefit of an investment after accounting for inflation and taxes. The after-tax real rate of return is an accurate measure of investment earnings and usually differs significantly from an investment’s nominal rate of return, or its return before inflation and taxes. However, investments in tax-advantaged securities (such as municipal bonds) and inflation-protected securities (such as TIPS) as well as investments held in tax-advantaged accounts such as Roth IRAs will show less discrepancy between nominal returns and after-tax real rates of return. | N3 |
| AGCM | acronym for Autorità Garante della Concorrenza e del Mercato | N1 |
| Aged Debtor Analysis | detailed report about how much you were/are owed at a certain period. | N5 |
| Agency Broker | Broker/dealer who acts as agent between market makers and investors. | N6 |
| Agency Trade | Undertaken on behalf of the client on a best endeavours (and best execution) basis. The client bears the risk (profit or loss) of price movements between giving and completing the order. | N6 |
| Agent | Person acting on behalf of someone else (Principal). | N2 |
| Agio | Additional amount (premium) paid in the context of a capital increase; difference between the nominal value of the share and the contribution payable. | N2 |
| Agio | an additional amount paid on the nominal value, which has to be paid at the issuance of Share | N1 |
| AGM | acronym for Annual General Meeting | N1 |
| Agreed Takeover | see Friendly Takeover | N1 |
| AIM | originally known as the Alternative Investment Market and abbreviated as AIM, this UK stock market is operated by the London Stock Exchange and is now known simply as AIM. It provides a lighter regulatory environment than the Main Market of the LSE, and so enables smaller and growing companies to access the public market. | N1 |
| AIM | See Alternative Investment Market. | N6 |
| AIM Rules | may refer to the AIM Rules for Companies or the AIM Rules for Nominated Advisers | N1 |
| AIM Rules for Companies | means the rules published by the London Stock Exchange for companies whose Securities are traded on AIM | N1 |
| AIM Rules for Nominated Advisors | means the rules published by the London Stock Exchange for Nominated Advisers of companies whose Securities are traded on AIM | N1 |
| AIMR | Association for Investment Management and Research. See CFA Institute. | N6 |
| AJD | acronym for Actos Jurídicos Documentados, the Spanish version of Stamp Duty | N1 |
| All Cash, All Stock Offer | A proposal by one company to purchase all of another company’s outstanding shares from its shareholders for cash. An all cash, all stock offer is one method by which an acquisition can be completed. In this type of offer, one way for the acquiring company to sweeten the deal and try to get uncertain shareholders to agree to a sale is to offer a premium over the price for which the shares are presently trading. | N3 |
| All or Substantially All | this phrase is used in contractual provisions and corporate statutes, but the precise meaning is the subject of much debate (and litigation). It does not necessarily mean what it sounds like in general layman’s terms. In general Substantially All means more than 50 percent, but how much more and what categories should be measured to determine whether the event fits the phrase (e.g., assets, revenues, profits) are critical issues. Another critical issue is how to measure the object of the qualifying phrase, e.g., assets. Should the assets be measured in terms of value, revenue producing capability, profit producing capability or some other attribute? Similar issues abound in the measurement of revenues (e.g., over what period, on a cash or an Accrual basis, etc.). 1. (US) see, e.g., Sharon Steel Corp. v. Chase Manhattan Bank, N.A., 691 F.2d 1039 (2d Cir. 1982); B.S.F. Co. v. Phila. Nat’l Bank, 204 A.2d 746 (Del. 1964); and Hollinger Inc. v. Hollinger Internat’l, Inc., 858 A.2 342 (Del. 2004). |
N1 |
| Allotment | 1. (UK and HKG) means the unconditional right of a party to be included on a UK or Hong Kong company’s register of members, and occurring in advance of the issuance of such Shares to the party 2. (SGP) means the appropriation to a person of a certain number of Shares, though not necessarily specific Shares. A Share is said to be issued when a shareholder is put in control of the Shares allotted to him. |
N1 |
| All-Share Index | See FTSE All-Share Index. | N6 |
| ALM | See asset/liability modelling. | N6 |
| Alpha | Incremental return added by an investment manager through active management. | N6 |
| Alpha Transfer | Investment strategy combining active management in one asset class (the alpha) with strategic exposure to a different underlying asset class. | N6 |
| Alternative Dispute Resolution | Umbrella term for various types of out-of-court dispute resolution (e.g. Mediation Clause). | N2 |
| Alternative Dispute Resolution | collective term for the ways that parties can settle disputes short of litigation, most often with the help of a third party (e.g., mediation, negotiations, Arbitration etc.) | N1 |
| Alternative Investment Market (AIM) | Market operated by the London Stock Exchange for smaller companies. The requirements and costs of listing are less onerous than on the main stock exchange. | N6 |
| Alternative Investments | Investments that do not fit into the mainstream areas of equities, bonds and property, and which would normally only form a small proportion of pension plan portfolios. Examples include private equity/venture capital, hedge funds and commodities. They are typically brought into a portfolio to increase diversification. | N6 |
| Amalgamation | see Merger and Scheme of Arrangement | N1 |
| AMC | Annual management charge. See management charges. | N6 |
| Amendement Carrez | see Carrez Amendement | N1 |
| Amendement Charasse | see Charasse Amendement | N1 |
| Amendment | Change or addition to an existing agreement. | N2 |
| American Depositary Receipt | an issuance of negotiable certificates that represent Securities of a non-US company that trade in the US financial markets, with each individual Share referred to as an American Depositary Share. See also ADR and ADS. | N1 |
| American Depository Receipt (ADR) | Security issued by a US bank to represent shares of a foreign (i.e. non-US) company, which can be traded on a US stock exchange as if they were American securities. Similar securities are available on other stock markets. | N6 |
| American Stock Exchange (AMEX) | Stock exchange for certain US stocks not listed on the New York Stock Exchange (NYSE). AMEX stocks tend to be smaller than those listed on the NYSE. | N6 |
| American Style Option | a type of Option where the holder can exercise the Option at any time | N1 |
| American-style Option | Option that can be exercised at any stage during its life, at or before expiration date. The value of an American-style option will always be greater than or equal to the value of a similar Europeanstyle option. | N6 |
| AMF | acronym for the French Autorité des Marchés Financiers | N1 |
| AML | acronym for Anti-Money Laundering. Same as Know Your Client or KYC. | N1 |
| Amortisation | Write-downs on intangible assets, such as Goodwill; different from Depreciation, which applies to tangible fixed assets. | N2 |
| Amortisation | An American word for depreciation. | N5 |
| Amortisation | Repayment by instalments over a period of time. | N6 |
| Amortization | in accounting, the expensing of the cost of the Acquisition of assets over the expected life of the asset | N1 |
| Analyst | See investment analyst. | N6 |
| Ancillary Agreement | A further agreement or other arrangement made by the parties that is provided for in the main agreement (or concluded at the same time as the main agreement). | N2 |
| Angel Investor | Business Angel. | N2 |
| Angel Investor | an Investor (usually an individual as opposed to a firm) that provides capital for a business Start-Up, usually in exchange for equity ownership. Think “Shark Tank” or “Dragons Den,” a series of reality television programs broadcast internationally featuring entrepreneurs pitching their business ideas in order to secure investment finance from a panel of Angel Investors/Venture Capitalists (the eponymous “sharks” and “dragons”). | N1 |
| Annex | Appendix to a document, especially to a contract (see also Attachment; Exhibit; Schedule). | N2 |
| Announcement | The announcement of the acquisition includes notifying the press, and all stakeholders such as employees, customers, suppliers, the Market, …). The announcement may include elements on the deal rationale and envisaged results and consequences. | N3 |
| Announcement | an important part of the 100-day plan is the announcement of the acquisition. This includes notifying the press as well as communicating the consequences and the changes that this will entail to stakeholders (staff, customers, suppliers, etc.). | N5 |
| Annual Accounts | A company’s financial statements for the year (see also Annual Financial Statements). | N2 |
| Annual Financial Statements | A company’s financial statements for the year (see also Annual Accounts). | N2 |
| Annual General Meeting | means a general meeting of company’s shareholders commonly called in order to approve the company’s annual accounts. In the case of a Public Company, an Annual General Meeting is required to be called by law. 1. (FRA) an Annual General Meeting is required to be called by law for any form of company, either public or not, within six months of the fiscal yearend, in order to approve the company’s annual accounts |
N1 |
| Annual Percentage Rate (APR) | Cost of debt that is paid by borrowers, expressed as an annualised figure. | N6 |
| Annualised Return | Periodic rate of return converted into an equivalent one-year rate of return. For example, a return of 75% earned over five years converts to an average annualised return of 11.8% per year. | N6 |
| Annuity | Contract designed to provide regular payments to the policyholder in return for an initial lump sum payment. Annuities may have a guaranteed period and/or be payable for life. Payments may be fixed or may vary. | N6 |
| Antecedent Transaction | see Reviewable Transaction | N1 |
| Anti-Assignment Provision | see Assignment Provision | N1 |
| Anti-Competitive | when a potential Business Combination would prevent or reduce competition in the market; such a deal is unlikely to receive Merger Clearance | N1 |
| Anti-dilution | See Dilution. | N2 |
| Anti-Dilution Provision | a provision in a company’s contract or constituent document that is designed to protect (in a specified fashion) the holder of a Class or series of equity Security from having the holder’s Equity Interest in the company reduced or diluted by issuances of other Securities or dividends. There are a variety of common types of Anti-Dilution Provisions, so it is important to understand precisely which type of Anti- Dilution Provision is intended to be utilized in the specific circumstance. | N1 |
| Anti-embarrassment Clause | Provision under which the purchase price is subsequently adjusted upward if the buyer resells at a higher price within a certain period (Non-embarrassment Clause; Debtor Warrant). | N2 |
| Anti-Money Laundering | see AML, Know Your Client and KYC | N1 |
| Anti-Sandbagging | a provision in an Acquisition Agreement that limits or eliminates a Seller’s liability for inaccuracies in Representations and Warranties of which the Buyer had knowledge before Closing | N1 |
| Anti-sandbagging Clause | A provision in a sale and purchase agreement that excludes warranty claims if the recipient of a warranty was aware that a warranty was inaccurate (see Sandbagging; Pro-sandbagging Clause). | N2 |
| Anti-Takeover Laws | a generic reference to state or national statutes, as applicable, that impede or preclude Hostile Takeovers 1. (US) there have been several US Supreme Court cases dealing with whether various types of state Anti-Takeover Laws are pre-empted by the federal Takeover statute and rules. As a practical matter, state Anti- Takeover Laws have virtually no practical impact, because the universality of the Poison Pill precludes Closing on Unilateral Takeovers. Accordingly, Hostile deals invariably end either by being dropped by the Hostile Bidder or by becoming negotiated deals, in which case the Target Company Board will be required to waive the provisions of any applicable Anti-Takeover Law. 2. (SGP) see Frustrating Action | N1 |
| Anti-trust filing | notifying the competition authorities of the acquisition. | N3 |
| Antitrust/Anti-trust Clearance: | see Merger Clearance | N1 |
| Any and All Bid | see Any and All Offer | N1 |
| Any and All Offer | a Tender Offer or Exchange Offer for all outstanding common Shares of a Target Company | N1 |
| APA | acronym for Asset Purchase Agreement | N1 |
| Apostille | a certificate issued pursuant to the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (the Convention), which facilitates the circulation of public documents between state parties. The Apostille replaces the cumbersome and often costly formalities of a full legalisation process with the mere issuance of a certificate. Instead of legalisation by the appropriate embassy, the notary’s certificate and seal are certified as genuine by the competent authority of the state on whose territory the document has been executed. The Convention applies to public documents (such as a notarial act or a document with notarial authentication of signatures) executed in one state party to the Convention and to be used in another state party to the Convention. So now you know. | N1 |
| Appraisal | a process for the judicial determination of the fair value of Shares, in jurisdictions for which Appraisal Rights are asserted | N1 |
| Appraisal | also known as Valuation. | N7 |
| Appraisal Rights | rights provided by statutes that permit shareholders of Target Companies in certain types of Acquisitions to decline receipt of the Merger Consideration, and in lieu thereof, to sue in court to receive a judicially determined value for Shares of the Target Company. Exercise of Appraisal Rights usually requires strict adherence to statutory requirements. 1. (US) in practice, shareholders historically have rarely availed themselves of Appraisal Rights because of the procedural hurdles to assertion in an Appraisal proceeding and because of the costs, uncertainties and time involved to complete litigation. However, the historical trend is changing |
N1 |
| APR | See annual percentage rate. | N6 |
| Arbitrage | profiting by trading on price disparities involving the same item, similar items or fungible items. One type of Arbitrage involves capturing a difference in price for the same item in different markets (e.g., if a Common Stock is traded on both the NYSE and the LSE and does so at slightly different prices, an Arbitrageur can buy Stock in the cheaper market and sell the same amount of Stock in the other, pocketing the difference). See also Risk Arbitrage and Merger Arbitrage. | N1 |
| Arbitrage | Risk-free profit derived from differences in price when the same or equivalent investment is traded on two or more markets or in more than one form. By taking advantage of price disparities between markets, arbitrageurs perform the economic function of making these markets trade more efficiently. | N6 |
| Arbitrageur | a person or entity that engages in Arbitrage | N1 |
| Arbitration | Process of resolving legal disputes through an arbitral tribunal, rather than through the ordinary (state) courts. | N2 |
| Arbitration | a form of Alternative Dispute Resolution outside of litigation, where the parties to a dispute refer it to one or more persons (often experts in a specific field) by whose decision they agree in advance to be bound | N1 |
| Arbitration Provision | a provision in an agreement according to which the parties agree to resolve their disputes arising from or in connection with the agreement through Arbitration | N1 |
| Article 68 Company | a company incorporated under article 68 of the Commercial Companies Law of Qatar. An Article 68 Company has the ability to opt out of provisions of the Commercial Companies Law of Qatar. A key pre-requisite for the incorporation of an Article 68 Company is that one of its founding shareholders must be an entity owned at least 51 percent by the government of Qatar. | N1 |
| Articles of Association | the written rule about running a company agreed by shareholders, directors and the company secretary. Needed when registering a company and accompanied by a Memorandum of association. | N5 |
| Articles of Association | see Charter and Bylaws | N1 |
| Articles of Incorporation | see Charter | N1 |
| ASAP | as soon as possible. Usually heard in connection with the time required to Closing. | N1 |
| A-Shares, B-Shares | In finance an “A-share” is a designation for a ‘class’ of common or preferred stock that typically has weakened voting rights or other benefits compared to B share or “C-share” that may have been created. The equity structure, or how many types of shares are offered, is determined by the corporate charter. | N3 |
| A-shares, B-shares | to be able to grant different rights to different groups of shareholders (e.g. founders, finance providers, etc.), several types of shares are often created. For example, the articles of incorporation could stipulate that the holders of B shares have the right to appoint a director to the board. | N5 |
| Asian option | Option whose price at expiration depends on the average value of the underlying asset over the life of the option. | N6 |
| As-if Clause | Contractual provision via which the parties act “as if” a right or an agreement has already been transferred, even if the consent of a third party (for example a contractual counterparty) is still outstanding. As-if clauses are found particularly frequently in Asset Deals. | N2 |
| Ask Price | Lowest price for which an investor or dealer will sell a given security or commodity. Also called offer price. | N6 |
| Asset | Any item of value. | N2 |
| Asset | things of value owned by a company are assets. Assets can be tangible (i.e., physical), such as stocks, land, buildings, or equipment, or they may be intangible (i.e., things a company has a legal right or claim to), such as goodwill, monies owed or intellectual property rights. | N5 |
| Asset | Anything that has a monetary value. | N6 |
| Asset Acquisition | a Combination effected through the Acquisition of assets from a Target Company. In most jurisdictions, an Asset Acquisition typically also involves an assumption of certain liabilities; however, because the parties can bargain over which assets will be acquired and which liabilities will be assumed, the transaction form can be far more flexible in its structure and outcome than a Merger, Combination or Stock Purchase. See also Asset Purchase Agreement and 363 Sale. 1. (HKG) in the Hong Kong context, consideration should be given as to whether an Asset Acquisition may constitute a business acquisition — in which case the Transfer of Businesses (Protection of Creditors) Ordinance applies | N1 |
| Asset Acquisition Agreement | see Asset Purchase Agreement | N1 |
| Asset Acquisition Strategy | An asset acquisition strategy is the purchase of a company by buying its assets instead of its stock. An asset acquisition strategy may be used for a takeover or buyout if the target is bankrupt. Market knowledge, research and experience are important to a successful asset acquisition strategy. In some cases, a plan for selling the asset, called asset disposition, is built into the asset acquisition strategy. | N3 |
| Asset Allocation | Distribution of investments across categories of assets, such as cash, equities and bonds. Asset allocation affects both risk and return and is a central concept in financial planning and investment management. | N6 |
| Asset Approach | a general manner of estimating the value of a business using one or more methods based on a summation of the value of the assets, net of liabilities, where each has been valued using either the market, income, or cost approach. Also known as asset-based approach. See also Cost Approach. | N7 |
| Asset Backed Securities (ABS) | According to the definition by the former German Federal Banking Supervisory Authority (Bundesaufsichtsamt für das Kreditwesen – BAKred), the term “comprises securities and certificates of indebtedness representing payment claims against a special purpose vehicle established solely for the purposes of the ABStransaction. The payment claims are ‘backed’ by a pool of uncertified receivables (‘assets’) which are transferred to the special purpose vehicle and serve as security, largely for the benefit of the holders of the Asset Backed Securities (‘investors’). | N2 |
| Asset Carry | Return associated with holding an asset, if positive (e.g. interest earned by the holder of fixed income bond), or the cost of holding an asset, if negative (e.g. warehousing costs of holding commodities). | N6 |
| Asset Class | Broad category of assets of a similar type — for example, equities, bonds, property and cash. | N6 |
| Asset Deal | An acquisition where the buyer does not take over shares of the target, but cherry-picks certain assets. The target’s operations are continued under the acquirer’s legal entity (the buyer creates a new legal entity or uses an existing one). The buyer is exposed to smaller risk as possibilities of adverse effects arising are minimised, since within the asset deal, apart from the assets, only certain liabilities are taken over. The seller will generally prefer a share deal as it offers the complete exit from the business and its related risks. | N3 |
| Asset Deal | An asset deal involves acquiring (some or all of) a company’s assets, liabilities and contractual relationships, in other words, assets in the form of rights, claims, property or movable items, along with liabilities. By virtue of the principle of certainty under property law, each particular asset must be individually identified, or at least determinable, in the agreement. Succession applies only in relation to the specified assets; the alternative to an asset deal is a Share Deal. | N2 |
| Asset Deal | An agreement in which the assets, not the shares of a company are sold. This has three special consequences. First, most of the debts, including the majority of hidden debts, remain behind in the selling company. Second, this agreement undergoes a different tax treatment ( see also tax treatment). Third, there are consequences for the legal continuity of the activities of the company. | N4 |
| Asset Deal | an agreement in which the assets, not the shares of a company are sold. This has three special considerations. First, most of the debts remain behind in the selling company. Second, this agreement is subject to different tax treatment. And finally, there might be ramifications for the legal continuity of the activities of the company | N5 |
| Asset Deal | see Asset Acquisition | N1 |
| Asset Manager | Firm or individual who manages (i.e. buys and sells) a portfolio of assets. | N6 |
| Asset Purchase Agreement | an Acquisition Agreement providing for the Acquisition of a specified part or all of a Target Company’s or Seller’s assets, sometimes accompanied by an assumption of a specified part or all of a Target Company’s liabilities. Asset purchases allow the Buyer to not acquire certain assets of the Target Company. See also Asset Acquisition. 1. (US) often used for various commercial reasons in M&A transactions, but very commonly used in Carve-Out Transactions, 363 Sales or other distressed M&A transactions 2. (UK) often used for various commercial reasons in M&A transactions, but very commonly used in pre-Administration or Pre-Pack and other distressed M&A transactions |
N1 |
| Asset Purchase Agreement (APA) | Agreement on the purchase and transfer of assets and contractual relationships in the form of an Asset Deal. | N2 |
| Asset Stripping | a term describing the purchase of a business with the intention of breaking it up (rather than running it) because its NAV is greater than the purchase price. In some contexts Asset Stripping is something of a pejorative term. | N1 |
| Asset Stripping | Process of splitting up and selling parts of a business separately for profit-making purposes. | N6 |
| Asset Swap | The exchange of a flow of payments from a given security (the asset) in return for a different set of cash flows. | N6 |
| Asset/liability Modelling (ALM) | Projection of future movements in assets and liabilities, and especially the relationship between the two. ALM is used to provide an insight into the likely effect of different asset allocation strategies on a pension scheme’s future financial position. (See also stochastic modelling.) | N6 |
| Asset-backed Security | Security backed by a pool of notes or receivables against assets of a similar type, such as credit card receivables. | N6 |
| Asset-based Finance | A specialised method of providing structured working capital and term loans that are secured by accounts receivable, inventory, machinery, equipment and/or property/real estate. Often used to raise finance in the acquisition of a business. | N5 |
| Assets Under Management | the total sum of funds acquired and administered by a Private Equity firm | N1 |
| Assignment | a transfer of rights and, if possible, obligations under a contract (e.g., a Credit Agreement to a new Lender) 1. (UK and HKG) under English/Hong Kong law, while you can assign rights, you are not able to assign obligations (see therefore Assignment and Assumption and also Novation) 2. (FRA) under French law, while you can assign rights, you are not able to assign obligations (see therefore Assignment and Assumption and also Novation). Called délégation under French law. 3. (ITA) under Italian law an Assignment of obligations does not generally imply the release of the transferor, absent consent from the transferred party |
N1 |
| Assignment and Assumption | when rights are transferred and the assuming party (e.g., a new Lender) also assumes the obligations of the transferor (e.g., the old Lender), which is then released from those obligations 1. (UK and HKG) when an Assignment does not work due to the inability under English/Hong Kong law to assign obligations, and/or where a Novation is not practicable due to loss of Security implications, English/ Hong Kong law uses an Assignment and Assumption 2. (FRA) under French law, called a délégation parfaite 3. (ITA) under Italian law an Assignment of obligations does not generally imply the release of the transferor, absent consent from the transferred party |
N1 |
| Assignment Provision | a provision in a contract specifying under what terms and conditions the contract may be assigned for some or all purposes by a party to another entity or person. Assignments may be entire, or may be limited — as in an Assignment of payment streams or (except in Hong Kong) an Assignment of obligations. Sometimes called an Anti-Assignment Provision if it specifies that the contract may not be assigned (or may not be assigned except under specified circumstances) to another party for all or certain purposes. | N1 |
| Associate | Salaried lawyer. | N2 |
| Association for Investment Management and Research (AIMR) | See CFA Institute. | N6 |
| Assumed Liabilities | liabilities assumed by a Buyer in connection with an Asset Acquisition | N1 |
| Asymmetrical Collar | when used to describe Exchange Ratio Collars, means Collars that deviate from the reference value or reference ratio by different amounts or percentages. So what goes up does not always come down in the same proportion or vice-versa. | N1 |
| At Arm’s Length | Transactions conducted on standard market terms and comparable with a transaction between unrelated parties. | N2 |
| At Par | Having a current price equal to face or par value. | N6 |
| Attachment | Appendix to a document, especially to a contract (see also Annex; Exhibit; Schedule). | N2 |
| At-the-Money | Indicates that a traded option has no intrinsic value (positive or negative), i.e. the underlying share price is equal to the strike price. | N6 |
| Attorney-at-Law | Lawyer. | N2 |
| Attorney-in-Fact | Representative (see also Authorised Person). | N2 |
| Attribution | See performance attribution. | N6 |
| Attrition | the annual percentage rate of loss (or churn) of an existing asset such as a customer relationship Intangible Asset. | N7 |
| Auction | Auction procedure; the Target is sold by way of a Bidding Process. | N2 |
| Auction | a generic term used to describe a process for selling a Target Company or the assets of a Seller. The process involves at least two Bidders making Bids in competition with one another. There are no settled rules for an Auction, but two patterns are most common: (1) a controlled, limited, private, or Quiet Auction in which a limited number of parties are invited to participate and the process is almost always intended to be confidential; and (2) a Widespread Auction or Public Auction in which a larger number of parties are invited to participate, sometimes by what amounts to a public notice of the Auction Process. | N1 |
| Auction Draft | the Acquisition Agreement provided by a Seller (or Target Company) to potential Bidders in connection with an Auction | N1 |
| Auction Process | see Auction | N1 |
| Auction Sale | Auction | N2 |
| Audit | Inspection of a company’s books and other documents by an independent Auditor, who may document his conclusions in an opinion (Auditor’s Certificate) and / or an audit report. | N2 |
| audit | Unbiased examination and opinion of the financial statements of an organisation. It can be internal (by employees of the organisation) or external (by an outside firm). | N6 |
| Auditor | See Audit. | N2 |
| Auditor | an auditor is often asked to issue a report on the closing accounts | N5 |
| Auditor’s Certificate | See Audit. | N2 |
| Authorisation | Required by the Financial Services and Markets Act 2000 for any firm or individual who wants to conduct investment business in the UK, unless the firm is exempt from regulation under the Act. | N6 |
| Authorised Person | Authorised representative (see also Attorney-in-Fact). | N2 |
| Authorised Person | 1. (UK) a person who is authorised for the purposes of FSMA to carry out regulated activity 2. (HKG) a person who is authorised for the purposes of the SFO to carry out a regulated activity |
N1 |
| Authorised Share Capital | Nominal amount of share capital that a company is authorised to issue, in terms of its articles of constitution. | N6 |
| Authorized Share Capital | the maximum Par Value of Shares that a company may legally issue 1. (HKG) the concept of Authorized Share Capital for Hong Kong-incorporated companies will be abolished once the new Companies Ordinance comes into operation (expected in 2014) |
N1 |
| Authorised Unit Trust | Unit trust which has been authorised by the FSA. (See also unit trust.) | N6 |
| Autofinancing Capacity | A growing company has a need for investments, including in operating assets and working capital. To a certain extent, a company can finance its growth from its own operating cash flow. The extent to which this is possible is called auto-financing capacity. However, if the company wants to grow faster than its auto-financing capacity permits, it must attract external financing. | N4 |
| Autorità Garante della Concorrenza e del Mercato | the Italian competition commission. See Competition Commission. | N1 |
| Autorité de la Concurrence | the French competition authority. See Competition Commission. | N1 |
| Autorité des Marchés Financiers | the French financial market authority | N1 |
| Autorité des marchés financiers (AMF) | French regulatory body tasked with improving the efficiency of France’s financial regulatory system. Its three main functions are to protect investor interests, to set standards for the provision of investor-related information and to marshal the functioning of financial markets. | N6 |
| AVC | See additional voluntary contributions. (See also FSAVC.) | N6 |
| Average Daily Volume of Portfolio | Weighted sum of the quantity of each asset to be traded divided by that asset’s average daily traded volume. | N6 |
Reference
N1: referring to The Book of Jargon – Global Mergers & Acquisitions, first edition, the Latham & Watkins, available at https://www.lw.com/admin/Upload/Documents/BoJ_Global_MandA-locked-March-2015.pdf.
N2: referring to Glossary of Key M&A and Corporate Terms, 4th edition, Dr Anne Meckbach and Dr Tobias Grau, available at https://cms.law/en/deu/publication/glossary-of-key-m-a-and-corporate-terms-2020.
N3：referring to M&A Dictionary, Global PMI Partners, available at https://gpmip.com/dictionary/.
N4：referring to M&A jargon demystified, KPMG, available at https://issuu.com/kpmg_be/docs/kpmg_m_a_vakjargon_en_digital.
N5: referring to Simple Guide to M&A Terminology and Jargon, Lucas & Weston Ltd., available at https://uploads-ssl.webflow.com/5708da760dd2dc033a78bd13/5b7ea45f3dbc72645fbee4b2_L%26W%20-%20M%26A%20Glossary.pdf.
N6：referring to INVESTMENT DICTIONARY, MARSH & McLENNAN COMPANIES, available at https://www.mercer.com/content/dam/mercer/attachments/europe/Netherlands/ic-dictionary-mercer.pdf.
N7: referring to International Valuation Glossary—Business Valuation, November 2021, jointly published by ASA, CBV Institute, RICS and TAQEEM, available at https://www.appraisers.org/docs/default-source/default-document-library/international-business-valuation-glossary_en_final.pdf?sfvrsn=e37c69d4_2.
The above information is collected from the Internet and reorganized for the purposes of learning and sharing only and not for any other purposes. It can not be guaranteed to be error-free.