| E |
| M&A Term | Definition | Note |
| EAFE | Europe, Australasia and Far East. Often used to describe an overseas equity mandate for US investors. |
N6 |
| Early Stage (private equity) | Existing company requiring finance which has developed a prototype product or service but still has limited revenue. |
N6 |
| Early Stage Finance | Participation of a Financial Investor at an early phase of a company’s development, but after the Seed Finance stage. The common feature of both stages is that the success of the company is still very difficult to assess, meaning that investment involves major risks. For this reason, an early stage investor will usually insist on a substantial amount of equity in return for his investment. | N2 |
| Earnings | Net profits of a company available for distribution to shareholders. | N6 |
| Earnings Per Share | profit after tax divided by the number of issued and outstanding Shares of Common Stock or, if applicable, Ordinary Shares in issue | N1 |
| Earnings Per Share (EPS) | Company’s annual earnings divided by the number of shares in issue. “Fully diluted” earnings per share takes account of the total number of shares allowing for any convertible securities. |
N6 |
| Earnings Yield | Company’s earnings per share divided by its current share price. This is the inverse of the price/earnings (P/E) ratio. | N6 |
| Earn-Out | a provision in an Acquisition Agreement that provides for payment of additional consideration to the shareholders of the Target Company if the Target Company achieves specified objectives (usually financial, but sometimes also event driven, e.g., achievement of regulatory or other milestones) during a period following the Acquisition. Earn-Outs typically are found in Acquisitions of companies with a small number of shareholders, so that Earn-Out payments do not require issuance of a Security, such as a CVR. See also Contingent Value Right. Compare Clawback. | N1 |
| Earn-out | In an earn-out, the buyer agrees to make a variable payment above and beyond the fixed purchase price. This element is calculated as a function of the future performance of the Target and is dependent on a pre-defined reference metric being reached or exceeded within a certain period of time. Earn-out clauses enable the parties to bridge the gap between divergent purchase price expectations. However, in such a situation the seller continues to bear some of the target’s business risk after Closing without having the same ability to influence its development as in the past. The seller will wish to have contractual safeguards in place in this respect and against the threat of manipulation. This makes it difficult for the buyer to integrate the target into its own operations or to sell the company (or part of it) on, and often gives rise to contentious negotiations. In contrast, a seller holding a Debtor Warrant participates in any higher proceeds in the event that the firm is sold on to a third party, regardless of the future performance of the target. | N2 |
| Earn-out | if there is a major price discussion between the buyer and seller due to differing views on the future results of the company, an earn-out may provide a solution. It makes the final price partly dependent on the future achievement of certain objectives. However, it is essential to be vigilant. In addition to subsequent discussions on the measurement of the results on which the earn-out is based, an earn-out can also obstruct the efficient integration of the company. This is because the earn-out clause requires that the results ‘after the acquisition’ are compared with the performance objectives recorded ‘before the acquisition’. The full integration of the company with the acquirer, and thus achieving synergies, can make the interpretation of any differences more complex. |
N4 |
| Earn-out | an arrangement which makes a proportion of the final value/price dependent on the future achievement of certain, normally financial, objectives. Effective for driving further value if the target business is forecasting growth. | N5 |
| EASDAQ | Independent, Brussels-based, pan-European stock market set up in November 1996. It is set up along similar lines to NASDAQ in the US and tends to attract smaller and growth-oriented companies. Companies are allowed to list and trade in euros, sterling or US dollars. | N6 |
| EBIT | a very common financial term which is an acronym for earnings before interest and taxes. EBIT is sometimes used in lieu of EBITDA and sometimes in addition to EBITDA as a measure of a company’s ability to service debt. | N1 |
| EBIT | Short for “earnings before interest and taxes”; EBIT (like EBITA, EBITDA and EBT) is a performance metric often used for valuing a business and establishing a purchase price. | N2 |
| EBIT / Earnings Before Interest and Tax | the profit before interest and taxes. This is also called operating profit or operating profit before tax. | N5 |
| EBIT/Earnings Before Interest and Tax | the profit before interest and taxes. This is also called operating profit or operating profit before tax. | N4 |
| EBITA | Short for “earnings before interest, taxes and amortisation”; like EBIT, EBITDA and EBT, EBITA is a metric often used for valuing a business and establishing a purchase price. | N2 |
| EBITDA | acronym for earnings before interest, taxes, Depreciation and Amortization. Because this calculation eliminates the effects of financing and accounting decisions, EBITDA is often used to assess a company’s ability to service debt. | N1 |
| EBITDA | Short for “earnings before interest, taxes, depreciation and amortisation”; like EBIT, EBITA and EBT, EBITDA is a metric often used for valuing a business and establishing a purchase price. | N2 |
| EBITDA / Earnings Before Interest, Tax, Depreciation and Amortisation |
the profit before interest, taxes, depreciation and amortisation. This is a gauge of the operating cash flow of a company. | N5 |
| EBITDA/Earnings Before Interest, Tax, Depreciation and Amortization |
the profit before interest, taxes, depreciation and amortization. This is a gauge of the operating cash flow of a company |
N4 |
| EBITDAR/Earnings Before Interest, Tax, Depreciation, Amortization and Rent |
the profit before interest, taxes, depreciation, amortization, and rent. This is a gauge of the operating cash flow of a company before the payment of rent. Assets can be financed in different ways (renting, operating leases, finance leases, sale with loan, etc.) Since rent affects EBITDA whereas a sale with a loan does not, EBITDAR is a concept that is used so that the results can be analyzed and compared independently of how the assets are financed. | N4 |
| EBT | Short for “earnings before taxes”; like EBIT, EBITA and EBITDA, EBT is a metric often used for valuing a business and establishing a purchase price. | N2 |
| ECB | acronym for European Central Bank or the English Cricket Board depending on where your interests lie | N1 |
| ECB | See European Central Bank. | N6 |
| ECL | Equity Commitment Letter. | N2 |
| ECN | See electronic communications network. | N6 |
| Economic Cycle | Historic analysis of markets and economies demonstrates that they generally move in cycles. A typical cycle would start with a period of low economic activity and low confidence, depressing consumer spending. After some time, in anticipation of an economic and earnings recovery, share prices start to rise. Interest rates fall and stimulate economic activity, and as the economy improves, company earnings rise. This expanding economy eventually puts upward pressure on inflation and interest rates. Bond prices fall and, as interest rates and inflation rise further, company earnings are hit and share prices slump, leading to the start of another cycle. | N6 |
| Economic Income | monetary inflows or outflows resulting from business activities (e.g., Cash Flows, EBITDA, net income). | N7 |
| Economic Indicators | Statistics that give an indication of the state of an economy. Commonly used indicators in investment analysis include wholesale and retail inflation measures, growth for various sectors of the economy, short- and long-term interest rates, the extent of unused manufacturing capacity and retail sales. |
N6 |
| Economic Obsolescence | a form of depreciation or loss in value or usefulness of an asset caused by factors external to the asset, especially factors related to changes in demand for products or services produced by the asset. See also Functional Obsolescence and Physical Obsolescence. | N7 |
| Economy of Scale | this is where two or more operations operating merged can create direct cost savings producing working efficiencies and enhancing profitability. Using the greater buying power of a larger group applied to a new customer base is a good example of an economy of scale. See also Synergy. | N5 |
| E-data Room | electronic data room. Web-based applications make it possible to organize data rooms in a way that allows them to be consulted online (in a protected form) once all the documents have been scanned. | N4 |
| EDGAR | acronym for the SEC’s Electronic Data Gathering, Analysis and Retrieval system. EDGAR is where you can retrieve a company’s periodic and other SEC filings. It can be found at www.sec.gov. | N1 |
| EEA | acronym for European Economic Area | N1 |
| Effective Control | under the Singapore Takeover Code, Effective Control means a holding, or aggregate holdings, of Shares carrying 30 percent or more of a company’s voting rights, irrespective of whether that holding (or holdings) gives de facto control | N1 |
| Effective Date | see Effective Time | N1 |
| Effective Date | Date on which a transaction takes economic effect. | N2 |
| Effective Date | see also Valuation Date, Measurement Date, or date of value. | N7 |
| Effective Time | means the point in time at which an agreement becomes operational or otherwise goes into effect. Acquisition Agreements usually provide for an Effective Time, at which point the Acquisition goes into effect as a legal matter. 1. (US) also referred to as the time that the Merger is effective pursuant to the Certificate of Merger | N1 |
| Efficient Frontier | Line of risk and reward that graphs all portfolios providing the greatest expected return for a given level of risk or, equivalently, the lowest risk for a given expected return. | N6 |
| Efficient Market | Investment market where new information is quickly reflected in the price of securities in the market. It is generally more difficult for an investor to outperform in such a market. |
N6 |
| Efficient Portfolio | Portfolio which appears on the efficient frontier. There is no portfolio which has a greater expected return with the same level of risk. |
N6 |
| EGM | acronym for Extraordinary General Meeting | N1 |
| EIS (Enterprise Investment Scheme) | a government incentive scheme designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. Strict rules apply, and specialist advice is recommended. | N5 |
| Electronic Communications Network (ECN) |
Electronic system that brings buyers and sellers together for the electronic execution of trades. It disseminates information to interested parties about the orders entered into the network and allows these orders to be executed. The ECN thereby networks major brokerages (and individual traders) so that they can trade directly between themselves without having to go through a middleman. |
N6 |
| Electronic Data Room | another name for a Virtual Data Room | N1 |
| Emerging Market | Financial market in a developing or newly industrialising country. Such markets can deliver high returns because of the rapid pace of industrialisation, but can be risky owing to low liquidity, lack of reliable information and potential political instability. | N6 |
| Emerging Market Debt | Debt issued by governments and corporations within developing economies. Debt may be issued in the currency of the issuing country or, more commonly, in the currency of a major industrialised economy. | N6 |
| Emirate | any of the following states of the UAE: Abu Dhabi, Dubai, Sharjah, Ajman, Fujairah, Ras Al Khaimah and Umm Al Quwain | N1 |
| Emiri Decree Company | a separate legal entity, established through the promulgation of a decree issued by the Ruler of an individual Emirate in the UAE. Unless specified in the relevant decree, the UAE Companies Act does not apply to such entities. The method of governance for such companies is as set out in the relevant decree. Examples include Emirates (the airline), Mubadala Development Company and Investment Corporation of Dubai. | N1 |
| Employee Buy-out | Transaction in which the workforce of the Target acquire the shares in the company (see also MBO and MBI). | N2 |
| Employee Retirement Income Security Act of 1974 | the fundamental Federal statute regulating pension and welfare plans covering most classes of employees. ERISA has two primary impacts on M&A transactions. First, a Buyer will almost always conduct Due Diligence on a Target Company’s employee benefit plans to confirm that the plans are maintained in accordance with ERISA’s requirements. Second, in the event the Buyer is a PE Sponsor (almost all of which manage funds invested by ERISA regulated pension funds), the transaction will need to be structured appropriately to ensure that the pension funds’ investment complies with ERISA requirements. | N1 |
| Employee Retirement Income Security Act (1974) (ERISA) |
Federal law in the US which governs pension plans in the private sector and specifies minimum levels of pension plan participation, vesting, funding and many other fundamentals. Also introduced stringent new standards of fiduciary responsibility on investment issues. | N6 |
| Employee Share Option Plan | a plan pursuant to which the company may grant Options to purchase its Stock and other forms of equity compensation such as Stock Appreciation Rights, Restricted Stock and Restricted Stock Units to employees, directors and consultants. Although sometimes referred to as an ESOP, it is not the same as an Employee Stock Ownership Plan. | N1 |
| Employee Share Option Scheme | see Employee Share Option Plan | N1 |
| Employee Stock Ownership Plan | a common form of Qualified Plan and trust that is invested primarily in company Stock. In M&A transactions ESOP participants usually have the right to direct the trustee who holds the company stock regarding the disposition of the Shares. 1. (US) additional ERISA Fiduciary requirements can apply to ESOPs in M&A transactions | N1 |
| Employee Stock Purchase Plan | an employee benefit plan pursuant to which cash contributions by employees are used to acquire company Stock at a discount (e.g., 15 percent) from the company during specified periods. See ESPP. | N1 |
| Empty Voting | in general, means any situation in which the person possessing the right to vote Stock has no economic interest or less than a full economic interest in the Stock, for example votes cast by an owner of Shares who has used Put Options and Call Options or other derivative Instruments to insulate herself from any changes in price of the Common Stock. Because the owner has Hedged away the economic interests of ownership, his/her voting is said to be Empty. | N1 |
| End Date | another name for Outside Date, Long Stop Date or Drop Dead Date. Also the date that an agreement comes to a natural end. | N1 |
| End of Period Discounting | a convention used when discounting Economic Income to present value that reflects such income being generated at the end of each respective period. Contrast with Mid-Period Discounting. | N7 |
| Engagement Letter | is most often used to describe a formal retention agreement between a company and its Financial Advisor (or sometimes its legal advisor). Virtually all Financial Advisors have a form of Engagement Letter covering such matters as fees, reimbursement of expenses, duration of engagement, rights of termination and the client’s obligation to indemnify the Financial Advisor. Although the terms of an Engagement Letter typically are extensively negotiated, the Indemnification provisions are customarily considered sacrosanct by the Financial Advisor and thus not subject to meaningful negotiation. | N1 |
| Engagement Letter | Letter of Engagement. | N2 |
| Enhanced Indexation | Method of investment which attempts to outperform an index, but to a lesser extent than a traditional active manager. (See active management, passive management.) | N6 |
| Enhanced Scrutiny | a US standard of judicial review of a decision made by a Board of Directors. Enhanced Scrutiny — stricter than the Business Judgment Rule — may be applicable to certain Acquisitions. The Revlon Doctrine and Unocal/Unitrin Doctrine are examples of standards of Enhanced Scrutiny. | N1 |
| Enterprise Value | Value of a company before deducting debt and adding cash; if debt is deducted and cash added, the result is the Equity Value. | N2 |
| Enterprise Value | the Market Value of Invested Capital, typically adjusted to remove all or a portion of cash and cash equivalents, and other Nonoperating Assets. See also Market Value of Invested Capital and Invested Capital. | N7 |
| Enterprise Value (EV) | Market value measure of a company from the point of view of the aggregate of all the company’s sources of funding, namely: debtholders, preferred shareholders, minority shareholders and common equity holders. Because EV is neutral with respect to capital structure, it is useful when comparing companies with diverse capital structures. (See EV/EBITDA.) | N6 |
| Enterprise Value / EV | the market values of common stock and long-term debt of the company minus any cash reserves. This is the debt and cash free value of a company | N5 |
| Entire Fairness | a judicially created doctrine under Delaware law which requires that a Controlling Shareholder treat its controlled entity with Entire Fairness when engaging in a transaction with the controlled entity. The most common application of the Entire Fairness doctrine is when the Controlling Shareholder purchases all of the publicly held Stock of the Controlled Company in an Acquisition. In the US, Entire Fairness encompasses both fair process and fair price. Fair process deals with whether and to what degree members of the Board of Directors of the company, independent of the Controlling Shareholder, as well as shareholders, were free of coercion by the Controlling Shareholder in determining their response to the proposed Related Party Transaction. Fair price addresses whether the consideration proposed to be paid by the Controlling Shareholder in the Related Party Transaction was equivalent to that which would have been received in an arms-length bargain with an unrelated third party. | N1 |
| Entrenched Provisions | refers to provisions in a company’s Constitutional Document which may be amended or repealed only if certain procedures are complied with, and/or if certain conditions are met; conditions more restrictive than those applicable in the case of a Special Resolution | N1 |
| Entrepreneurs’ Relief | allows individuals or certain trustees to claim relief from Capital Gains Tax in respect of a disposal of assets or Shares of a company upon certain conditions being met | N1 |
| Entrepreneurs’ Relief | A tax treatment which reduces the amount of Capital Gains Tax on disposal of qualifying business assets, as long as certain criteria meet the qualifying conditions throughout a one-year qualifying period either up to the date of disposal or the date the business ceased. | N5 |
| Environmental Due Diligence | Investigation of the Target with regard to environmental law and technical aspects; typically includes a review of whether any site contamination exists, the local situation and environmental regulations, and the possession of any official permits that may be required. |
N2 |
| Environmental Due Diligence | the investigation into the environmental situation in relation to soil pollution, water pollution, air pollution and noise pollution. | N4 |
| Environmental due diligence | the investigation into the environmental situation about soil pollution, water pollution, air pollution and noise pollution. Usually undertaken by the purchaser’s accountants or specialist advisers. | N5 |
| Environmental Indemnity | Indemnity for environmental risks identified in the course of Environmental Due Diligence. | N2 |
| Envy Ratio | formula according to which the preference terms (e.g., conditioned by lower valuation) may be calculated pursuant to which the Management of a Target Company may acquire interests in the Target Company compared to the interests in the Target Company held by the Private Equity Fund. The formula is Envy Ratio=(x/% Shares) / (y/% Shares); whereby x = investment of Private Equity Fund and y=investment by Management. | N1 |
| Envy Ratio | The ratio of the effective price paid by management to the price paid by the investment fund for their respective investments is sometimes also called the ‘envy ratio’. | N4 |
| EPS | See earnings per share. | N6 |
| Equalisation | As income from a unit trust accrues between dividend distributions, it is added to the unit price. An investor purchasing units will thus be paying for some of the next dividend payment in the unit price, effectively turning capital into income (which is taxable). Unit trust managers state an equalisation factor with each distribution to indicate the proportion of the total distribution that is not subject to income tax. | N6 |
| Equal-Weighted Index | Index in which each component security is given an equal value weighting. This results in the need for frequent rebalancing, as the relative weightings are disturbed whenever the value of one security moves relative to another. (See capitalisation-weighted index.) | N6 |
| Equities | Commonly used term for ordinary shares. | N6 |
| Equitisation | Using derivatives to create an exposure to equity market price movements, without actually investing in stocks. The derivative positions combined with cash holdings can be arranged so as to give the same returns as having the assets actually invested in stocks. The cash kept in a portfolio for regular settlement of trades can be equitised so that the portfolio is fully exposed to the stock market. | N6 |
| Equity | With reference to a company, equity comprises subscribed capital plus statutory reserves, plus free reserves, plus profits brought forward, minus losses brought forward and plus or minus any profit or loss for the year. | N2 |
| Equity | is the difference between the value of any assets and the cost of the liabilities of something owned. | N5 |
| Equity Bridge | Interim financing provided to bridge an equity gap. | N2 |
| Equity Check | see Equity Contribution | N1 |
| Equity Commitment | in a Leveraged Buyout, a Sponsor’s commitment to make the Equity Contribution to a Special Purpose Vehicle or otherwise thinly-capitalized Purchaser entity | N1 |
| Equity Commitment | Binding commitment by a third party to provide a specific amount of equity. | N2 |
| Equity Commitment Letter | Contractual commitment by a company (often a parent company or one that is otherwise affiliated) to provide a (group) company (in many cases a newly established Special Purpose Vehicle) with a specific amount of equity. An equity commitment letter often states that the supported entity is able to fulfil its obligations (purchase price payment, investments, or the like) or will be able to do so in the future. The equity commitment letter may be issued either to the supported company or to third parties (sellers or recipients of investments). | N2 |
| Equity Contribution | think of this as the Sponsor’s “down payment” in a Leveraged Buyout. Equity Contribution is the amount of funds the Private Equity Fund contributes to finance a portion of the Acquisition Consideration. The amount of and terms and conditions for provision of the Equity Contribution are generally documented in the equity Commitment Letter. See also Rollover Equity. | N1 |
| Equity Cure | curing the breach of Financial Covenants by the contribution of new equity from the shareholders | N1 |
| Equity Financing | The (purchase) price is financed out of equity (rather than via borrowing). | N2 |
| Equity Instrument | a contract that creates a residual interest in a business’ assets after deducting its liabilities. | N7 |
| Equity Interest | generally refers to an ownership interest in a company which is distinct from debt and entitled to a share of profit or earnings of the company. An Equity Interest may consist of Stock or Shares (preferred or common) in a corporation, Limited Liability Company or membership interests in a Limited Liability Company, Partnership interests (limited or general) in a Partnership, etc. | N1 |
| Equity Kicker | an Equity Interest offered to a debt provider (i.e., a Lender under a Credit Agreement or a Bond Buyer), usually in the form of Warrants issued by the company to such debt provider, typically as an incentive for such Lender or bondholder to buy the debt | N1 |
| Equity Kicker | An external capital provider is granted the right to a share in the financed company’s equity, in addition to receiving interest on the loan. | N2 |
| Equity Risk Premium | Extra return expected from investing in equities rather than a riskless asset to compensate for the additional risk/volatility associated with equities. | N6 |
| Equity Risk Premium | the incremental return that investors expect to receive from an investment in public equity securities over that of a risk-free security. It is generally calculated as the difference between the expected rate of return on the overall market and the return on a risk-free instrument. Also known as market risk premium, or equity market risk premium. | N7 |
| Equity Slug | see Equity Contribution | N1 |
| Equity Sponsor | an Investor, typically a Private Equity Fund. See also Private Equity Sponsor. | N1 |
| Equity Sponsor | Equity provider. | N2 |
| Equity Value | a very slippery term because of the large number of ways to value equity in a company, including a specific market trading price (such as the opening or closing price on a specified day), and average or weighted average of market trading prices over a period (ranging from a day to months or years) multiplied by the aggregate of all of a company’s Common Stock on a Fully Diluted basis. Equity Value may also be assessed by reference to Comparable Company Analysis, Comparable Acquisition Analysis, Discounted Cash Flow, asset based value, sum ofthe parts value, going concern value, etc. | N1 |
| Equity Value | Value of a company after deducting debt and adding cash; if debt is not deducted and cash is not added, the result is the Enterprise Value. | N2 |
| Equity Value | the value of a business to its equity holders. Equity Value is generally calculated as the Market Value of Invested Capital less the market value of any debt and Debt Equivalents, Hybrid Securities, and other non-equity claims. |
N7 |
| Equivalent Yield (real estate) | Time-weighted average of the initial yield and reversionary yield. (See initial yield [real estate], reversionary yield [real estate].) | N6 |
| ERISA | acronym for the US Employee Retirement Income Security Act of 1974 | N1 |
| ERISA | See Employee Retirement Income Security Act (1974). | N6 |
| Escheat | a state’s ability to claim abandoned property. If a person dies without heirs (or without an established will), such person’s property is said to Escheat to the government. Merger Consideration payable to Target Company shareholders who cannot be located is subject to Escheat under many state corporation law statutes, if not claimed by the shareholders within the period specified in the relevant statute 1. (UK) see Bona Vacantia | N1 |
| Escrow | the act of placing money (or other items) with a third party (an Escrow Agent) to secure a future obligation. Often used to secure a Seller’s post-Closing Indemnification obligation for pre-Closing breaches of Representations and Warranties. Also used colloquially to mean the holding of signed documents to prevent them becoming operative until a specified event, e.g., “We will hold the documents in Escrow until the Closing Date.” Escrow can be informal or governed by a written agreement, with or without a third party acting as Escrow Agent. See also Escrow Agent. | N1 |
| Escrow | an amount deposited in a frozen bank account to guarantee that any losses will be compensated | N4 |
| Escrow | An escrow is a financial instrument held by a third party, typically a lawyer, on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled. |
N5 |
| Escrow Account | a bank account on which the Escrow Amount is credited | N1 |
| Escrow Account | Fiduciary account, lawyer’s or notary’s escrow account or separate bank account into which a portion of the purchase price is transferred to act as security for potential warranty claims. If part of the purchase price is retained by the buyer for a defined period of time as security, this is referred to as a Holdback. | N2 |
| Escrow Agent | the Fiduciary who administrates the Escrow Account | N1 |
| Escrow Amount | the sum of money used in an Escrow as security for receivables from a contract party | N1 |
| ESG | environmental, social, and governance factors that impact a business or asset and its financial performance and operations (e.g., the impact of sustainability and ethical practices). | N7 |
| ESOP | an acronym for an Employee Stock Ownership Plan, but sometimes used for an Employee Share Option Plan/Employee Share Option Scheme | N1 |
| ESPP | acronym for Employee Stock Purchase Plan | N1 |
| ETF | See exchange traded fund. | N6 |
| Ethical Investment | Term given to an investment philosophy focusing on investing in companies according to non-economic criteria such as ethical or religious beliefs. (See socially responsible investment, green investing.) | N6 |
| EU | acronym for European Union | N1 |
| EU Insolvency Regulation | Council Regulation (EC) No. 1346/2000 of 29 May 2000 on Insolvency proceedings. The regulation sets out a regime for the determination of Insolvency jurisdiction, and the recognition of the effects of an Insolvency proceeding, throughout the EU (other than Denmark). | N1 |
| EURIBOR | the Euro Interbank Offered Rate (EURIBOR) is a daily reference rate based on the averaged interest rates at which Eurozone banks offer to lend unsecured funds to other banks in the Euro wholesale money market (or interbank market). See also LIBOR. | N1 |
| Euribor/ Euro Interbank Offered Rate | This is a reference interest rate often used as the basis for a variable interest rate | N4 |
| Euro | single European currency unit used by the Participating Member States of the EU and the cause of much political debate in the UK and elsewhere | N1 |
| Eurobond | generally used to describe a Bond typically issued in a currency other than the currency of the country or market of the Issuer. Typically, a Eurobond is issued in a Reg S Only offering and governed by an English law governed trust deed with relatively fewer Covenants compared to a High Yield Bond Indenture. Note that the term is also used in very broad terms to describe any Securities not offered pursuant to Rule 144A. Eurobond (or quoted Eurobond) also, however, has an additional, separate meaning in a UK tax context, as payments of interest on a “quoted Eurobond” are not subject to UK Withholding Taxes on interest. A quoted Eurobond for these purposes is a Security which is issued by a company, is listed on an “organized stock exchange” and which carries a right to interest (there is no stipulation as to currency in this context, in contrast to the alternative meaning previously described). | N1 |
| Eurobond | Bond that is issued by an international syndicate or government and offered to investors in a number of countries at the same time. It is usually issued by a non-European company for sale in Europe, but it does not have to be. Eurobonds are issued outside the jurisdiction of any single country and are traded through banks rather than on stock exchanges. | N6 |
| Euroclear France | the French central Depository and clearing organization. Euroclear Franceshares an integrated settlement solution and harmonized custody service — Euroclear Settlement of Euronextzone Securities (ESES) with other European countries. | N1 |
| Euroland/Eurozone | Group of countries which use the euro as their common currency. | N6 |
| Euronext Brussels | the exchange of Brussels. On 22 September 2002, the exchange merged with the exchanges of Paris, Lisbon and Amsterdam to create Euronext NV, the first pan-European exchange for shares and derivatives. Its name was changed to Euronext Brussels at that time. On 4 April 2007, Euronext N.V. merged with NYSE Group Inc. to create NYSE Euronext Inc. | N4 |
| European Central Bank | the central bank for the Euro, with primary responsibility to maintain the Euro’s purchasing power and therefore price stability in the Euro area. The European Central Bank also sets short-term interest rates. | N1 |
| European Central Bank (ECB) | Independent central bank responsible for setting and implementing monetary policy and conducting foreign exchange and reserve operations for the members of the (European) Economic and Monetary Union (EMU). Established in June 1998 as an essential part of the adoption of a single currency. | N6 |
| European Commission | the executive arm of the European Union and the body responsible for proposing European legislation and making decisions. Additionally, the European Commission, together with the national competition authorities, also directly enforces EU competition rules to make EU markets work better, by ensuring that all companies compete equally and fairly on their merits. | N1 |
| European Economic Area | the trading area currently comprising the European Union Member States and Norway, Iceland and Liechtenstein. Created in 1994. | N1 |
| European Style Option | a type of Option where the holder can only exercise the Option at a certain time, normally at the time of maturity | N1 |
| European-style option | Option which can only be exercised for a short, specified period of time just prior to its expiration, usually a single day. |
N6 |
| Eurotop Indices | Indices covering the largest companies in Europe and calculated by FTSE International. Variations are Eurotop 100 (top 100 companies) and Eurotop 300 (top 300 companies). | N6 |
| EV/EBITDA | Method of valuing companies calculated by dividing a company’s enterprise value (market value of equity plus net debt of the company) by its earnings before interest, tax, depreciation and amortisation. This measure relates short term cash flow generation to market valuation. | N6 |
| EV/Enterprise Value | this is the debt and cash free value of a company. Both the DCF(F) method and many multiples initially result in an EV, which must be adjusted for the cash and debts. Only then is it possible to arrive at a value of the shares. | N4 |
| Event Driven Hedge Funds | Hedge Funds which make investments based upon a likely occurrence of a future event, such as an Acquisition, disposition, Liquidation, Reorganization or other similar event. Some Event Driven Hedge Funds try to bring about the type of event which is the basis for their investment in a company by letter writing campaigns, Proxy Contests and other aggressive activities. When Hedge Funds act this way they are behaving like Activist Investors. Event Driven Hedge Funds also frequently Arbitrage M&A transactions and fall into the generic category of Arbitrageurs. | N1 |
| Event Risk | Risk of a substantial change in the market price of a stock due to a particular event. Often used in bond markets to describe the risk that the rating of a bond will drop due to the taking on of additional debt or a recapitalisation by a company. | N6 |
| Evergreen Contract | Contract that is automatically renewed unless it is terminated by a certain date. | N2 |
| Ex Ante | Before the event; as seen prior to the occurrence of a certain event. | N2 |
| Ex Nunc | From now on; from a certain event in the future. | N2 |
| Ex Post | After the event; as seen after the occurrence of a certain event. | N2 |
| Ex Tunc | From the outset, also with retroactive effect. | N2 |
| Ex-ante | Forward-looking measure or estimate. (See tracking error.) | N6 |
| Excess Earnings | the amount of expected Cash Flow that exceeds the economic charge for the use of the Contributory Assets used to generate such cash flow. | N7 |
| Excess Earnings Method | a method of estimating the value of a business, determined as the sum of (i) the value of the selected Tangible Asset base, and (ii) the value of all of the Intangible Assets (including goodwill) derived by capitalizing Excess Earnings. Sometimes referred to as the capitalized excess earnings method. | N7 |
| Excess Only | Deductible. | N2 |
| Excess Return | Return of a security or portfolio in excess of its benchmark. | N6 |
| Exchange Act | see Securities Exchange Act | N1 |
| Exchange Feature | the feature in a Shareholder Rights Plan permitting holders of Rights (other than the Hostile Bidder) to exchange their rights for Shares of the Company’s Common Stock (generally at a one-for-one basis). This feature is less complicated than requiring holders of Rights to exercise them under the Flip-In feature and avoids the need for Rights holders to pay large amounts of cash for their new Shares. An Exchange Feature also allows the Target to invest the cash which is presumably surplus to its operating needs. Although not as Dilutive as requiring exercise of the Rights under the Flip-In feature, the Exchange Feature is considered sufficiently Dilutive to preserve the deterrent value of a Poison Pill. | N1 |
| Exchange Offer | a Unilateral Offer by a Bidder to purchase a Target Company’s Securities directly from the owner of those Securities for noncash consideration (most often Securities of the Bidder), in whole or in part. Other than the form of consideration offered, an Exchange Offer has the same basic legal and economic characteristics as a Tender Offer. 1. (HKG) the term Securities Exchange Offer is used | N1 |
| Exchange Rate | Measure of the value of one country’s currency in terms of another. Exchange rates may be either floating (determined by the market forces of supply and demand) or fixed (values are artificially held at a certain rate or within a certain narrow band of the value of a specified currency). | N6 |
| Exchange Ratio | the amount of Securities that the Buyer will pay for each Share of Target Company Stock. Exchange Ratio is sometimes (but not always) expressed as a mathematical ratio (e.g., 1.55 Shares of Buyer Common Stock for each Share of Target Company Stock or 1.55:1). If the Merger Consideration also includes a cash component, the amount of cash is usually expressed as an addition to the Exchange Ratio (e.g., 1.55 Shares of Buyer Common Stock and $30 for each Share of Target Company Stock). Exchange Ratios may be fixed, in which case the ratio is determined at the time of signing the Acquisition Agreement and does not change, regardless of subsequent changes in the market price of the Buyer’s Stock. Exchange Ratios may also be floating, in which case the Exchange Ratio in the Acquisition Agreement is expressed as a formula so that the market value of the Buyer’s Stock deliverable at Closing is a constant and the number of Shares of Buyer’s Stock that will be exchanged for each Share of Target Company Stock varies depending on the price of the Buyer’s Stock over a measurement period immediately preceding Closing. See also Fixed Exchange Ratio and Floating Exchange Ratio. | N1 |
| Exchange Ratio Collar | a way to change the risk allocation inherent in either a Fixed Exchange Ratio or a Floating Exchange Ratio. A Collar limits the effect of a change in market price of the Bidder’s Stock in the case of a Fixed Exchange Ratio by either converting the fixed ratio to a Floating Exchange Ratio when the Bidder’s Stock price appreciates or depreciates by more than a stated amount, and/or by allowing one or both parties to terminate the Acquisition Agreement. A Collar limits the effect of a change in market price of the Bidder’s Stock under a Floating Exchange Ratio by either converting the Floating Exchange Ratio to a Fixed Exchange Ratio when the Bidder’s Stock appreciates or depreciates by more than a stated amount, and/or or by allowing one both parties to terminate the agreement. Collars are often negotiated in terms of a percentage movement in the price (or average price over a measurement period) of the Bidder’s Stock, e.g., 10 percent or 20 percent. | N1 |
| Exchange Traded Fund (ETF) | Fund that tracks an index, but can be traded like a stock. The most well-known ETF is the SPDR, which tracks the S&P 500. | N6 |
| Exchange Traded Options | Options traded on a recognised exchange. | N6 |
| Exclusion Clause | a contract term that seeks to restrict the rights of the parties. Depending on the nature of the contract, Exclusion Clause enforceability may be subject to limitation in most jurisdictions | N1 |
| Exclusive Financing Commitments | a Lock-Up of one or several of the banks which customarily provide Leverage acquisition financing by a single Bidder or Bidder Group. Depending on the size of the Target Company and the number and identity of the banks that have entered into Exclusive Financing Commitments, an Exclusive Financing Commitment can effectively serve to block Competing Bids. | N1 |
| Exclusive Jurisdiction Provisions | another name for Exclusive Venue Provisions | N1 |
| Exclusive Venue Provisions | specify a contractually selected venue as the exclusive jurisdiction in which claims among the parties to the agreement may be lodged. Exclusive Venue Provisions also customarily specify that the law of the exclusive venue shall govern interpretation and enforcement of the agreement. 1. (US) very commonly an Acquisition Agreement specifies Delaware (or the Chancery Court in Delaware) as the exclusive jurisdiction in which the parties may sue one another on claims arising under the Acquisition Agreement. Similarly, acquisition financing agreements very commonly specify New York, or the Supreme Court in the County of New York as the exclusive jurisdiction in which the parties may sue one another on claims arising under the financing agreement, even if the Acquisition being financed has a different applicable Exclusive Jurisdiction Provision. | N1 |
| Exclusivity | see Exclusivity Agreement | N1 |
| Exclusivity | a clause in a letter or an agreement in which the seller states that it is not negotiating with any other parties and will not begin or enter into any such negotiations. Exclusivity is for a limited time period. | N4 |
| Exclusivity | a clause in a letter or an agreement in which the seller undertakes cease negotiations with other parties and not to enter into any new negotiations. Exclusivity is normally for a limited period, usually a few months or until a deal is concluded or negotiations are terminated. | N5 |
| Exclusivity Agreement | an agreement to deal with one party exclusively with respect to a business opportunity. Buyers sometimes seek exclusivity provisions from Sellers with respect to negotiations involving an Acquisition. Private Equity Sponsors sometimes seek exclusivity provisions from one or more Financing Sources to prevent the Financing Sources from simultaneously dealing with other Bidders in an Auction. See also Exclusive Financing provisions and Lock-Up. | N1 |
| Exclusivity Agreement | The seller agrees to negotiate solely with a single prospective buyer for a specified period and to provide (additional) information exclusively to that party. A fixed contractual penalty is often agreed for the event that the exclusivity agreement is breached. The penalty is intended as compensation for the costs incurred by the prospective buyer. | N2 |
| Exculpatory Charter Provisions | provisions in a Charter providing that members of the Board of Directors and officers will be exculpated from monetary liability arising in connection with their service to the corporation. Under Delaware law (Section 102(b)(7) of the DGCL), Charters may only exculpate directors from monetary damages for breaches of the Duty of Care, not the Duty of Loyalty. Almost every Public Company incorporated in Delaware has an Exculpatory Charter Provision. | N1 |
| Ex-dividend | Security where the purchaser is not entitled to receive the next coupon or dividend payment. A security’s cum-or ex-dividend status is dependent on the time it is purchased in the dividend/coupon payment cycle. (See cum dividend.) | N6 |
| Execution Copy | Final version of an agreement for Signing. | N2 |
| Execution Risk | the risk that a deal will not Close. See also Conditionality. | N1 |
| Executive | the Executive Director of the Corporate Finance Division of the SFC, who administers the HK Takeovers Code, undertakes investigations of Takeovers and other matters to which the HK Takeovers Code applies | N1 |
| Executive Compensation Plan | plan or agreement negotiated between an employer and executive level employees that often provides: base salary, bonuses, long-term equity incentives, Severance Plan, Parachute Payments, 280G Gross Ups and additional executive-only benefits and perquisites | N1 |
| Executive Summary | Key statements from an opinion or Due Diligence Report to provide decision-makers with a quick overview of the document and its findings. | N2 |
| Exempt Approved Pension Plan | Plan other than a personal pension approved under the Inland Revenue for certain tax advantages in relation to contributions and investment returns. | N6 |
| Exercise Price | the price at which an Option or Warrant may be exercised. See also Strike Price. | N1 |
| Exercise Price | Price at which a call option or put option may be exercised. Also known as the strike price. | N6 |
| Exhibit | Appendix to a document, especially to a contract (see also Annex; Attachment; Schedule). | N2 |
| Exit | the opportunity for Investors to sell their investment. Normally, the Exit from investment in a Private Company occurs either through a sale of the company or through its IPO/Flotation on the stock market. | N1 |
| Exit | Withdrawal of an investor through sale of his stake; possible exit methods include an IPO or Trade Sale. | N2 |
| Exit | when a fund steps down as an investor, this is referred to as exiting. At the time of its investment in a company, the PE fund already considers how it could sell back its shares in the company | N4 |
| Exit (also called ‘Realisation’) | The point at which a shareholder turns their investment into cash. Exits occur via trade sales, management buy-outs, management buy-ins, BIMBOs and occasionally flotation/listing. | N5 |
| Exit Multiple | on an Exit, the Multiple of EBITDA (or a similar metric) received as consideration in the transaction | N1 |
| Exit Strategy (private equity) | Method by which venture capitalists realise their original investment — usually by sale or flotation. | N6 |
| Exit Waterfall | Provision according to which the proceeds of an Exit are distributed in a certain order; an exit waterfall often involves a tiered arrangement which is intended to ensure that investors in particular have priority in getting back the funding they provided (see also Waterfall). | N2 |
| Exon-Florio | the US law pursuant to which the President was granted oversight over foreign investment in the US. President Reagan delegated the authority to review and approve such investments to the Committee on Foreign Investment in the United States (CFIUS). See also Foreign Investment Rules. | N1 |
| Exotic Options | Generic term for complex financial engineering products created using a combination of basic option contracts. | N6 |
| Expected Cash Flow | the probability-weighted average of the various possible scenarios of a subject business’ Cash Flows. | N7 |
| Expected Present Value Technique | a present value technique using the Expected Cash Flow of an asset, business, or investment. | N7 |
| Expected Return | Statistical measure of the average future return from an asset or portfolio. Often an asset with a higher expected return will also have a higher standard deviation of return. (See also mean, standard deviation of return.) | N6 |
| Expert Call | Telephone call between the advisors to the parties, possibly also involving specialists from the companies. The purpose is to clarify detailed queries that have arisen in the course of a transaction or Due Diligence. An expert call is often more efficient than a written Q&A Process, since questions can be posed and answered directly. The disadvantage of this method is the lower evidential weight of verbal statements. |
N2 |
| Expiration Date | another name for Termination Date | N1 |
| Expiry Date | Last date on which an option can be exercised. | N6 |
| Ex-post | Backward-looking measure using actual historical data. (See also tracking error.) | N6 |
| Extension | granting a party more time to perform an obligation under an agreement or moving a Termination Date further into the future | N1 |
| Extraordinary General Meeting | a general meeting of a company’s shareholders called in order to seek their consent for matters requiring or deemed by Board of Directors to require such consent, particularly pursuant to the company’s Articles of Association or under the relevant law 1. (FRA) required for certain reserved matters (determined by the Bylaws or the French commercial code, as the case may be and depending on the corporate form of the company) which require the approval of 2/3 of the shareholders | N1 |
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.