| I |
| M&A Term | Definition | Note |
| IAS | International Accounting Standards | N2 |
| IAS19 | See International Accounting Standard 19. | N6 |
| IBC | acronym for Independent Board Committee | N1 |
| IBERCLEAR | the Spanish Central Securities Depository. IBERCLEAR is in charge of both the register of Securities (held in book-entry form) and the clearing and settlement of all trades from the Spanish Stock Exchanges, the Public Debt Market, the AIAF Fixed Income Market and Latibex (the Latin American stock exchange denominated in Euros). See Depository. | N1 |
| IBES | the Institutional Brokers’ Estimate System or I/B/E/S collects and compiles earnings estimates by stock analysts for US Public Companies | N1 |
| IBO | acronym for Institutional Buy-Out | N1 |
| ICC Arbitration | Arbitration proceedings based on the arbitration rules defined by the International Chamber of Commerce (ICC). | N2 |
| Identifiable Intangible Asset | in a financial reporting context, an Intangible Asset is identifiable if it meets certain contractual and/or separability criteria as defined by a relevant standard (e.g., IFRS 3 or ASC 805) | N7 |
| IE01 | The change in present value of an asset or liability for a 1 basis point change in the implied inflation curve used to value the asset or liability. | N6 |
| IFA | acronym for Independent Financial Advisor | N1 |
| IFA Opinion | refers to the opinion of the IFA on the Offer of the Offeror in a Takeover Offer | N1 |
| IFRS | International Financial Reporting Standards | N3 |
| IFRS | International Financial Reporting Standards | N2 |
| IFRS | International Financial Reporting Standards issued by the International Accounting Standards Board (IASB). This is the international equivalent of US GAAP. More than 100 countries permit or require use of IFRS for preparing Financial Statements of Listed Companies, including countries in the European Union, Australia, Brazil, Canada, Chile, China, India, Israel, Mexico, South Africa and South Korea. Rule amendments which the SEC adopted in December 2007 allow foreign private Issuers to use Financial Statements without reconciliation to US GAAP, if the Financial Statements are prepared using the English language version of IFRS. See Latham & Watkins Client Alert No. 667, SEC Accepts Financial Statements From Foreign Private Issuers Without Reconciliation to US GAAP If Prepared Under International Financial Reporting Standards (January 16, 2008), available at www.lw.com. | N1 |
| IFRS/International Financial Reporting Standards | this is an international GAAP used for reporting purposes by listed companies in Belgium and the EU. | N4 |
| IIMR | See UK Society of Investment Professionals. | N6 |
| illiquid | Investment that cannot be quickly converted into cash at a predictable price — for example, real estate and thinly traded securities. | N6 |
| Illiquid | “Illiquid is the state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the asset. The lack of ready buyers also leads to larger discrepancies between the asking price (from the seller) and the bidding price (from a buyer) than would be found in an orderly market with daily trading activity.” | N3 |
| IM | acronym for Information Memorandum | N1 |
| IMA | See investment management agreement. | N6 |
| IMC | See Investment Management Certificate. | N6 |
| immunisation | Matching of assets and liabilities so that each is affected equally by changes in the external environment. For example, a pension plan may be at least partly protected from any change in the cost of buying an annuity by purchasing a long dated bond. While a fall in interest rates will increase the price of an annuity, this will be offset by a corresponding increase in the value of the bond. | N6 |
| Implementation Agreement | generally refers to an agreement between an Acquirer and a Target Company which implements a transaction such as a Merger, Acquisition or Scheme of Arrangement. Having been prohibited in 2011 in relation to UK Takeover Code transactions, use of Implementation Agreements in the UK is now more limited. | N1 |
| implementation shortfall | Quantitative measure of the cost of the transition, which includes both direct and indirect costs. It compares the actual value of the portfolio at the end of the transition process with the value that would have resulted had the transition been implemented instantaneously and at no cost at the outset. | N6 |
| implemented consulting | Combined service offered by consultants, whereby trustee clients delegate a range of fiduciary functions to the consultants to implement on behalf of the trust. | N6 |
| implied volatility | Volatility as calculated by determining the variable in the relevant option pricing formula (e.g. Black-Scholes) based on market option prices. (See also historic volatility.) | N6 |
| IMRO | Investment Management Regulatory Organisation. | N6 |
| In Good Faith | “Duty to perform according to the requirements of good faith”, section 242 of the German Civil Code (see also Bona Fide). | N2 |
| In Play | describes a company which has become a potential Takeover Target or has put itself up for sale | N1 |
| In the money | an option is ‘in the money’ if the price of the underlying security on the stock exchange is higher than the strike price in the case of a call option (‘right to buy’), or if the price of the underlying security on the stock exchange is lower than the strike price in the case of a put option (‘right to sell’). | N4 |
| In the Money | a Stock Option is In the Money when the holder can exercise it for a profit. A Convertible Bond is In the Money when its conversion value exceeds its Par Value. | N1 |
| Inbound | When assessing transactions or M&A market activities, “inbound” refers to transactions involving a foreign buyer. The opposite of inbound is Outbound. | N2 |
| Incentive | A bonus or reward linked to a specific achievement or outcome. It can consist of a cash payment, benefit in kind or a service. | N2 |
| Incentive Stock Option | a Stock Option tied to the performance of the company 1. (US) ISOs qualify for special tax treatment under the US Internal Revenue Code. ISOs are generally not taxed at grant or exercise, but upon disposition of the Shares acquired upon exercise of the ISO. If certain holding periods are met, the disposition of the Shares is eligible for long-term capital gain/ loss treatment. 2. (UK) see Long Term Incentive Plan | N1 |
| Income Approach | a general manner of estimating the value of an asset, business, or investment using one or more methods that convert expected Economic Income into a present amount. | N7 |
| income bond | Bond that promises to pay interest only when earned by the issuer. | N6 |
| Income Statement | a Financial Statement on which a company reports its Results of operations over a period of time (usually monthly, quarterly or annually). Also commonly referred to as a Profit and Loss Statement or P&L Statement. Think of an Income Statement as a movie and a Balance Sheet as a snapshot. | N1 |
| income stock | See high yield stock. | N6 |
| Incumbency Certificate | a certificate (generally issued by the secretary of a corporation) attesting to the fact that specified individuals are in fact officers, directors or otherwise authorized persons of the corporation. 1. (FRA) such a certificate does not exist in France, but the Registry of Commerce and Companies may deliver an Extrait K-bis which contains the main information regarding the company such as its name, Share Capital, registered address and the identity of its legal representatives | N1 |
| Indemnification | a promise to pay the other party in the amount of damages suffered by reason of a false Representation and Warranty or a breach of Covenant. In general, Indemnification is an amount paid to a party to make the whole with respect to a loss incurred against which the party had been indemnified or where recovery may not be available under contract or law. | N1 |
| Indemnification / Indemnity | The party providing an indemnity agrees to protect the beneficiary financially against certain liabilities (e.g. resulting from taxes or environmental risks). Indemnities are often agreed for matters that pre-date the transaction, but where the problem typically only comes to light later (e.g. clean-up operations to deal with contaminated sites). The level of indemnification provided in a contract is often unlimited. | N2 |
| Indemnification Annex | generally the first exhibit to the Commitment Letter, this annex lays out the terms of the Indemnification that must be provided by the Borrower or the Sponsor to the arranger as a condition to the offering of the commitment. Some bank forms incorporate the Indemnification provisions into the text of the Commitment Letter. | N1 |
| Indemnification Caps | a limit on the amount of Indemnification | N1 |
| Indemnities | compensation for damages. Indemnities are used if it is disclosed or known that a particular problem exists or could occur. A typical example could be thBank that offers a range of financial services, usually including fund management and advisory work, such as takeover and merger assistance, as well as corporate finance, including the placing of new share and bond issues, arrangement of loan or credite need to environmentally clean a site or premises at the termination of a lease. | N5 |
| Indemnities | compensation for damages. These are stipulated on top of the general safeguards ( see warranties) for a number of additional elements. Indemnities are used if it is known that a particular problem exists or could occur, for example if the cost of decontaminating the plot of land located at x is borne by y. | N4 |
| Indemnity | see Indemnification | N1 |
| Indemnity Clause | see Indemnification | N1 |
| indenture | Written agreement between the issuer of a bond and bondholders that specifies maturity date, interest rate, convertibility and any other options. | N6 |
| Independent Board Committee | a committee comprising of all nonexecutive directors who have no direct or indirect interest in an Offer, or possible Offer. The HK Takeovers Code requires a Public Company which is the target of an Offer to establish an Independent Board Committee to make a recommendation to that company’s shareholders (i) as to whether the Offer is, or is not, fair and reasonable and (ii) as to acceptance of or voting (if any) on the Offer. | N1 |
| Independent Chairman | a chairman of the Board of a company who is an Independent Director | N1 |
| Independent Director | there is no single authoritative definition of a director’s independence. In general, the term means a director who does not have a material relationship with the company. 1. (US) Sarbanes-Oxley and the rules adopted by the stock exchanges have a complex set of requirements as to who qualifies as an Independent Director. In general, you know one when you see one. SEC rules require that the audit committee of a company be comprised entirely of Independent Directors. Stock exchange rules require that the full Board be comprised of a majority of Independent Directors. 2. (FRA) the definition of an Independent Director and the requirement to appoint such directors in Listed Companies in France result from good practice codes such as the AFEP-MEDEF code and the AMF’s recommendations 3. (HKG) more commonly known as an Independent Non-Executive Director or INED | N1 |
| Independent Financial Advisor | in a Takeover of a public Listed Company, the Board of Directors of the public Listed Company must appoint an Independent Financial Advisor to advise the Independent Directors and shareholders of the Offer. See IFA. | N1 |
| Independent Lawyer | at a minimum, independent means a lawyer who has no conflicts of interest (within the meaning of the Code of Professional Liability) with respect to the parties and the matter on which the lawyer is advising | N1 |
| Independent Non-Executive Director | an independent director who has no executive or management responsibility in the company. The tests of independence are found in Rule 3.13 of the Hong Kong Stock Exchange Listing Rules | N1 |
| index | a. Measure updated regularly that gives a representation of the movement in value of a particular market or a specified group of securities. b. List of prices or other characteristics representing a particular group of goods or services which gives an indication of movements over time — for example, the Retail Prices Index, the Average Earnings Index and the Retail Sales Index. c. To invest in line with the index weightings. | N6 |
| index fund | See index-tracking fund. | N6 |
| indexation | a. Use of index funds. (See also passive management.) b. Adjustment of payments or values in line with movements in a particular index of prices or earnings. | N6 |
| index-linked gilt | UK government stock with the interest payments and the final redemption proceeds linked to the Retail Prices Index. Such stocks provide protection against inflation whereas conventional gilts do not. | N6 |
| index-tracking fund | Investment fund which aims to match the returns on a particular market index. The fund may hold all the stocks in the particular index (known as replication) or, more commonly, use a mathematical model to select a sample that will perform as closely as possible to the index (known as sampling). Also known as an index fund. | N6 |
| Indication of Interest | a proposal for a Business Combination which is not intended to be binding. See also Letter of Intent. | N1 |
| Indicative | means illustrative terms. Indicative is frequently used in LBO transactions as a substitute provided by the Seller’s Financial Advisor for a pricing indication from third party Financing Sources. | N1 |
| Indicative Bid | see Preliminary Offer | N1 |
| Indicative Bid / Indicative Offer | The first, non-binding offer made by an interested party for a Target in the course of an Auction Process. | N2 |
| Indicative Offer | see Preliminary Offer | N1 |
| Industrial License | see Charter | N1 |
| industry sector | Companies listed on stock exchanges are usually categorised according to their principal area of activity, for example, banks, building materials, electronics, food producers, health care, leisure, oils, pharmaceuticals and retailers. | N6 |
| INED | acronym for Independent Non-Executive Director | N1 |
| inflation | Measure of the rate of increase in prices, for example, the movement over time in the Retail Prices Index. (See also index.) | N6 |
| inflation hedge ratio | The inflation PV01 of assets divided by the inflation PV01 of liabilities. | N6 |
| inflation swap | Exchange of two cash flows, one based on an agreed inflation rate for a period and the other based on the actual inflation rate for that period. Typically, the inflation basis will be LPI or RPI. | N6 |
| Info Memo / Information Memorandum (IM) | after signing an NDA, the potential buyer may be sent an information memorandum and a process letter. The information memorandum is a document that describes the company and should include the following information: a history of the company, description of products and services, market position, management, financial information, etc. | N5 |
| Info Memo/Information | information memorandum. After signing an NDA, the potential buyer may be sent an information memorandum and a process letter. The information memorandum is a document that describes the company and, in addition to a good summary, includes the following information: history of the company, description of products and services, market position, management, financial information, etc. | N4 |
| Information Agent | a function customarily performed by a Proxy Solicitor in connection with a Tender Offer or Exchange Offer. The Information Agent typically assists in the distribution of the offering documents to Beneficial Owners of the Security and stands ready to answer questions about the Offer, particularly its mechanics, and sometimes assists in the solicitation of Tender Offers. | N1 |
| Information Covenants | Requirement to inform the other party to the contract about certain facts on a regular basis. | N2 |
| Information memorandum | A short description of a company, with brief information on the company’s products or services, its history, its management, past and projected financials, market position, unique value propositions, etc. | N3 |
| Information Memorandum | A document prepared by the M&A advisors, the investment bank or the seller itself (often at the start of an Auction Process) and containing information about the Target which is more extensive than that in the Teaser. It is intended as an (additional) aid to help potential buyers decide whether to continue participating in the bidding process. | N2 |
| Information Memorandum | another name for an Offering Memorandum. See IM. | N1 |
| information ratio | Ratio of excess return to risk taken (as measured by tracking error). Hence, a measure of risk-adjusted return. | N6 |
| In-house (Legal) Counsel | Corporate counsel; lawyer employed by a company. | N2 |
| initial margin | Returnable collateral that must be deposited by a futures market participant when initiating an open position. It is also required of writers of options. | N6 |
| Initial Public Offering | the first public offering of a company’s equity Securities. See IPO. 1. (US) following an Initial Public Offering, a company becomes an SEC Reporting Company (if it wasn’t already) 2. (UK) see also Flotation and Admission and Disclosure Standards 3. (FRA) following an Initial Public Offering, a company becomes subject to the AMF’s General Regulation and to specific sets of rules of the French Commercial Code and French Monetary and Financial Code | N1 |
| initial public offering (IPO) | First public sale of a company’s equity resulting in a quoted stock price on a securities exchange. | N6 |
| Initial Public Offering (IPO) | Stock market flotation, i.e. procuring admission to public trading of a security on a stock exchange for the first time. | N2 |
| initial yield (real estate) | Annual rent divided by the value of the property. | N6 |
| Inside Basis | the basis that an entity has in its assets. Contrast with “outside basis,” which is a partner’s, member’s or shareholder’s basis in the entity’s Equity Interests. | N1 |
| inside information | Price-sensitive information that is not publicly available — information which only employees or management of a company are likely to know. | N6 |
| Insider | a person who possesses Inside Information | N1 |
| Insider Dealing | see also Insider Trading 1. (HKG) generally describes the act of dealing in Shares on the basis of Inside Information. Insider Dealing includes disclosing Inside Information to another person or encouraging another person to deal in Shares on the basis of Inside Information. Insider Dealing is a form of Market Misconduct under the SFO that may lead to either civil proceedings before the Market Misconduct Tribunal or criminal proceedings before the courts. | N1 |
| insider trading | Illegally trading in shares when in possession of price-sensitive information that is not known to the market. | N6 |
| Insider trading | prohibited trading with insider knowledge. This is the buying or selling of shares by persons with access to information about the listed company that is not publicly known | N4 |
| Insider trading | In some countries it is a criminal offence for an individual to trade based upon insider information — someone who is an insider by virtue of being connected with the company and has access to price sensitive information which other share holders do not have. | N3 |
| Insider Trading | the trading of a company’s Securities by Insiders. See also Insider Dealing.
1. (US) see also Rule 10b-5 2. (UK) describes the act of dealing in Shares on the basis of Inside Information. Insider Trading is a criminal offence in the UK under the Criminal Justice Act 1993 (CJA), which also makes it an offence to disclose Inside Information to another or to encourage another to deal in Shares on the basis of Inside Information (the “tipping offence”). See also the civil law Market Abuse regime, which applies to a broader range of abusive conduct (and may additionally apply to companies as well as individuals). 3. (DEU) regulated by the German Securities Trading Act (Wertpapierhandelsgesetz). According to Section 14 of the German Securities Trading Act, it is prohibited: (i) to make use of Inside Information to acquire or dispose of Insider Securities for one’s own account or for the account or on behalf of a third party; (ii) to disclose or make available Inside Information to a third party without the authority to do so; or (iii) to recommend, on the basis of Inside Information, that a third party acquire or dispose of Insider Securities, or to otherwise induce a third party to do so. 4. (FRA) various sets of rules of the AMF’s General Regulation in France strictly limit such trading, and if violated, may lead to criminal prosecutions if violated 5. (UAE) refer to Article 37 of SCA Decision No. 3/R or 2000 |
N1 |
| Insolvency | is the state of being unable to pay the money owed, by a person or company. | N5 |
| Insolvency | the more common expression used for describing Bankruptcy (which in certain jurisdictions is more usually applied to the Insolvency only of natural persons, although the terms are colloquially often used inter-changeably). The word describes both certain formal procedures, as well as the financial condition of being “insolvent,” which is the inability to pay one’s debts. This inability can trigger either Balance Sheet Insolvency (liabilities exceeding assets) or cash flow Insolvency (the inability to pay debts as they fall due), which vary according to the jurisdiction (see for example over-indebtedness which is a formulation of what can be seen as Balance Sheet Insolvency). In some jurisdictions, such as England or Germany, both the first two of these measures of Insolvency are in use and will determine eligibility to enter Insolvency proceedings. There is a significant amount of judicial authority on both cash-flow and Balance Sheet Insolvency, meaning that Insolvency is not necessarily easily proven, particularly by a creditor. As a result, and as a general precaution, European finance documents commonly include much wider situations of potential financial distress, including for example, the commencement of any security enforcement, which would be an Event of Default. | N1 |
| Insolvency Act | refers to the United Kingdom Insolvency Act 1986 which sets out the statutory framework for personal and corporate insolvencies in the UK | N1 |
| Insolvency Plan | 1. (DEU) English translation of the German Insolvenzplan. This is a plan of re-organization which requires the approval of a majority of creditors in number and by value, in a majority of the classes of creditors, and also sanction of the court. Increasingly popular in German Restructurings including Herlitz, Ihr Platz, Senator Entertainment and Sinn Leffers. 2. (FRA) similar procedure to the German Insolvenzplan (see below) in Insolvency proceedings in France, often called a Restructuring plan | N1 |
| in-specie transfer | Direct transfer of a basket of stocks from one manager’s portfolio to another without disinvesting and reinvesting. | N6 |
| Institute for Investment Management and Research (IIMR) | See UK Society of Investment Professionals. | N6 |
| Institutional Buy-Out | where a financial institution acquires a business and installs its own Management. Slightly different from a Bought Deal, where an institution negotiates the Acquisition of a business with a view to handing it over to an MBO or MBI team. See IBO. | N1 |
| institutional fund | Assets managed on an organisation rather than individual level. Types include pension plans, insurance funds, corporate funds, charities and banks. | N6 |
| Institutional investor | an institution such as a pension fund or insurance company that makes large investments and trades large quantities of securities, often receiving preferential treatment and paying lower transaction commissions. | N5 |
| Institutional investor | an institution such as a pension fund or insurance company that makes large investments and trades large quantities of securities, often receiving preferential treatment and paying lower transaction commissions | N4 |
| Institutional Investor | This type of investor has large amounts to invest (especially compared with private investors); typical examples include banks, funds and investment companies. Institutional investors often invest other people’s money as well as their own. | N2 |
| institutional investors | Investment managers managing money on behalf of institutional and other third-party funds. | N6 |
| Institutional Strip | refers to a company’s equity Share Capital and/or loan capital held by a Private Equity provider | N1 |
| Instrument | sometimes used to describe the document constituting a particular form of loan or Share Capital | N1 |
| Instrument of Transfer | a document used to effect the transfer of Shares of a Hong Kong incorporated company | N1 |
| Insurance due diligence | the investigation into the existing insurance coverage and variance analysis with the required coverage, as well as the investigation into the continuity of insurance coverage during the transaction process. Usually undertaken by the purchaser’s accountants or specialist advisers. | N5 |
| Insurance due diligence | the investigation into the existing insurance coverage and variance analysis with the required coverage, as well as the investigation into the continuity of insurance coverage during the transaction process | N4 |
| Insurgent | not the Target Company, but the other party in a Proxy Contest | N1 |
| Intangible Asset | an asset that lacks physical substance and derives value from the economic properties that grant rights and/or Economic Income to its owner (e.g., patents, copyrights, trademarks, or customer relationships). See also Identifiable Intangible Asset | N7 |
| Intangible assets | fixed assets that are intangible, i.e. isn’t physical like copyright, patents or trademarks | N5 |
| Intangible Assets | Such assets include software, patents, trademarks, copyrights, licenses, and customer and supplier relationships (see also section 266 (2) A. I. 1.–3., HGB (German Commercial Code)). IFRS require internally generated intangible assets to be capitalised. Under HGB rules, there was a ban on capitalisation of internally generated intangible assets until 2009. For financial years starting from 2010, the HGB provides the option of capitalising these assets on the commercial balance sheet (but not on the tax balance sheet). | N2 |
| Intangibles | All intangible assets like goodwill, patents, trademarks, unamortized debt discounts and deferred charges | N3 |
| Intellectual Property | a legal concept that refers to creations of the mind that are derived from intellectual or creative effort for which exclusive or fractional rights are recognized (e.g., trademarks, trade names, trade secrets, patents, copyright, design rights, and proprietary information). Intellectual property rights generally give the owner the right to prohibit others from using the property without permission | N7 |
| Intellectual Property (IP) | Intellectual property rights, e.g. to patents, trademarks or works protected by copyright. | N2 |
| Intellectual Property Rights (IPR) | the rights of ownership over intangible property: e.g. trademarks or patents. | N5 |
| inter-bank rate | Rate at which banks bid for or offer funds to each other in a particular market. | N6 |
| Intercreditor Agreement | Agreement between various creditors (e.g. shareholders or sellers who have provided loans and banks) which regulates the creditors’ relationships to each other and the ranking of their claims against the borrower. | N2 |
| Intercreditor Agreement | an agreement which sets forth the rules of engagement between two groups of Lenders with respect to shared Collateral or other intercreditor relationship matters. Think of this as a prenuptial agreement between two classes of creditors. Apart from addressing the obvious point that the first lien Lenders get paid out first from collateral proceeds and the second lien Lenders get paid out second in first lien/second lien deals, Intercreditor Agreements also lay out a number of important provisions regarding the right of each Lender group to take action with respect to the collateral and the Borrower generally. For example, in the Mezz market, the terms of the Subordination are set forth in an Intercreditor Agreement between the Mezz Lenders and the Administrative Agent under the Credit Agreement. | N1 |
| interest | Return earned on funds which have been loaned or invested (i.e. the amount a borrower pays to a lender for the use of his/her money). | N6 |
| interest hedge ratio | The interest rate PV01 of assets divided by the interest rate PV01 of liabilities. | N6 |
| Interest Margin | Percentage added to the lender’s refinancing rate (see also Margin). | N2 |
| interest rate collar | Simultaneous purchase and sale of a cap and a floor with the aim of maintaining interest rates within a defined range for a borrower or lender. The premium income from the sale of the floor reduces or offsets the cost of buying the cap. | N6 |
| interest rate swap | Exchange of two sets of cash flows, usually one based on a fixed interest rate and the other on a floating interest rate. | N6 |
| Interested Person Transaction | see Related Party Transaction | N1 |
| Interests In Shares | 1. (UK) in relation to UK Takeover Code transactions, Interest in Shares or Interest in Securities are defined in the UK Takeover Code broadly to include all long economic exposure in interests in a relevant Listed Company’s Securities (e.g., Options, voting control rights and full Share ownership). 2. (HKG) broadly defined under Part XV of the SFO to include “an interest of any kind whatsoever in the Shares” of listed corporations 3. (SGP) Section 7 of the Companies Act of Singapore defines Interests in Shares. For example, Section 7(4) provides that where a body corporate has, or is by the provisions of this section deemed to have, an Interest In Shares and: (i) the body corporate is, or its directors are, accustomed or under an obligation whether formal or informal to act in accordance with the directions, instructions or wishes of a person; or (ii) a person has a controlling interest in the body corporate, that person shall be deemed to have an interest in that Share. | N1 |
| Interim Accounts | a financial report that contains either a complete or condensed set of Financial Statements for a period shorter than an entity’s full financial year. Typically, interim accounts are subject to a review, but not an audit, by the entity’s auditors. | N1 |
| Interim Management Statements | under the EU Transparency Directive, and in the UK, the Disclosure and Transparency Rules, Interim Management Statements disclose financial performance updates by a listed Public Company (other than those who publish quarterly reports), during the first and second six months of a financial year | N1 |
| Interim Operating Covenants | Negative Covenants governing the Company’s operations during the interim period between signing and Closing | N1 |
| Interim Services Agreement | an agreement under which the Seller of a division or subsidiary promises to perform specified services (such as IT) with respect to the division or subsidiary, on behalf of the Buyer, for a period of time following the Closing of the Acquisition. See also Transition Services and Transition Services Agreement. | N1 |
| Interim Services Agreement | an agreement under which the Seller of a division or subsidiary promises to perform specified services (such as IT) with respect to the division or subsidiary, on behalf of the Buyer, for a period of time following the Closing of the Acquisition. See also Transition Services and Transition Services Agreement. | N1 |
| Interims | see Interim Management Statements | N1 |
| Interlocking Directors | any situation where a director on the Board of company A also sits on the Board of company B and a director on the Board of company B also sits on the Board of company A. If there are already Interlocking Directors on the Boards of the Target Company or Acquirer, a careful analysis of the resulting conflicts of interest is in order, as well as a process for insulating the transaction against those conflicts of interest (for example, Interlocking Directors recusing themselves from consideration of the deal). 1. (US) if the Business Combination creates Interlocking Directors, a Latham antitrust specialist should review the deal to be sure it does not violate Section 8 of the US Clayton Act of 1914, as amended | N1 |
| Interlocking shareholdings or cross shareholdings | Two or more group companies acquire shares of each other in large quantity or one company may distribute shares to the share holders of its group company to avoid threats of takeover bids. (If the interlocking of shareholdings is accompanied by joint voting agreement then the joint system of defence is termed “Pyramiding”.) | N3 |
| Interloper | another name for a Competing Bidder | N1 |
| Intermediary | adviser that brings together the principals in a deal or prospective deal. Intermediaries are usually accountants, other corporate advisers and merchant bankers. | N1 |
| Internal Rate of Return | the Discount Rate which equates the present value of expected net cash flows to the initial investment (cost) | N7 |
| Internal Rate of Return | an index number for the success of an investment. The IRR is an internal discount rate which has to be applied on the expected cash flows arising from an investment so that the net present value of the investment equals zero | N1 |
| internal rate of return (IRR) | Constant rate of return that makes the present value of all future cash flows from an investment equal to its purchase price. This is the calculation method usually used for assessing returns from private equity. | N6 |
| Internal Rate of Return (IRR) | The IRR is the interest rate at which the net present value of an investment is zero. The net present value of an investment is determined by comparing the initial cost of the investment with the total cash flows to the investor, discounted over the term of the investment. In this calculation, the IRR corresponds to the interest rate at which the returns to the investor must be discounted in order that their net present value corresponds to the initial investment, meaning that the net present value of the entire investment is zero. | N2 |
| International Accounting Standard 19 (IAS19) | Accounting standard (of the International Accounting Standards Board) which sets out the accounting treatment of retirement benefits such as pensions. Currently adopted as standard in Europe. | N6 |
| International Accounting Standards (IAS) | Until 2001, this was the name of the standards for worldwide harmonisation of financial reporting and accounting, now issued as International Financial Reporting Standards. | N2 |
| International Financial Reporting Standards (IFRS) | International financial reporting requirements for companies. Their purpose is to facilitate the preparation of internationally comparable annual and consolidated financial statements; they are published in English by the International Accounting Standards Board (IASB). | N2 |
| International Securities Identification Number (ISIN) | Combination of digits and letters used to identify securities (ISIN). | N2 |
| International Swaps and Derivatives Association (ISDA) | Trade organisation of participants in the market for over-the-counter derivatives. Responsible for creating the standardised ISDA Master Agreement. | N6 |
| in-the-money | Indicates whether a traded option has positive intrinsic value. If current market prices make it beneficial to exercise an option, the option has value and is therefore in the money. With call options it is where the exercise price is below the current price of the underlying security. With put options it is the reverse. (See also intrinsic value.) | N6 |
| Intrinsic Value | the value that an investor considers, on the basis of available facts, to be the “true,” “real,” or fundamental value that will become the Market Value when other investors reach the same conclusion. When the term applies to options, Intrinsic Value is the difference between the exercise (strike) price of an option and the market price of the underlying security | N7 |
| intrinsic value (of an option) | Difference between the strike price of a traded option and the market value of the underlying security. (See also at-themoney, in-the-money, time value.) | N6 |
| Inversion | Acquisition transaction in which a Target corporation from one jurisdiction (e.g., US) is acquired by a corporation from another jurisdiction | N1 |
| Invested Capital | the sum of a business’ equity, debt and Debt Equivalents, Hybrid Securities, and other non-equity claims. See also Enterprise Value and Market Value of Invested Capital | N7 |
| investment | Asset acquired for the purpose of producing income and/or capital gains for its owner. | N6 |
| investment advice | Advice about investment issues given formally by a suitably qualified person (as defined by the 1995 Pensions Act). The scope of advice might incorporate asset allocation strategy, appointment of investment managers and performance measurement. | N6 |
| investment adviser | See investment consultant | N6 |
| investment analyst | Individual who specialises in the analysis of companies and their performance. An analyst normally gathers information by studying the information contained in company annual reports, researching the product markets in which a particular company operates, visiting manufacturing sites and meeting with key company personnel. Analysts may also analyse markets and economies. | N6 |
| investment bank | Bank that offers a range of financial services, usually including fund management and advisory work, such as takeover and merger assistance, as well as corporate finance, including the placing of new share and bond issues, arrangement of loan or credit facilities, and stockbroking services. | N6 |
| Investment Bank | see Financial Advisor | N1 |
| Investment Capital | long-term equity capital provided by institutions to facilitate growth in Private Companies. See PE. | N1 |
| investment committee | Appointed subgroup of a plan’s trustee board responsible for various aspects of the plan’s investments. | N6 |
| Investment Committee | a committee which controls and advises the Management on all investments, the long-term investment policy and planned business expansions | N1 |
| Investment Company | generally, a company whose main business is holding Securities of other companies purely for investment purposes. As defined in the Investment Company Act, an Investment Company is: (i) engaged primarily in the business of investing, reinvesting or trading in Securities (or holds itself out as being in that business); (ii) owns “investment securities” which constitute more than 40 percent of the value of its assets on an unconsolidated basis (excluding US government securities and cash items); and (iii) is not entitled to any exemption from registration. A typical example of an Investment Company is a mutual fund, which is an entity organized to accept money or assets from Investors, pool those assets, and invest the assets on behalf of the Investors. 1. (HKG) more commonly refers to investment companies or collective investment vehicles which are listed on the Hong Kong Stock Exchange in accordance with Chapter 20 of the Listing Rules | N1 |
| investment constraints | See constraints. | N6 |
| investment consultant | Person or firm that is suitably qualified to give investment advice (as defined by the 1995 Pensions Act) to trustees or other responsible bodies. | N6 |
| investment grade | Bond rating of equal or greater than BBB (with S&P) or Baa3 (with Moody’s), indicating low uncertainty as to the issuer’s ability to meet the obligations undertaken in the bond. (See also low grade.) | N6 |
| Investment Grade | a rating of Baa3 or better by Moody’s, BBB — or better by S&P or BBB — or better by Fitch. For a discussion of Investment Grade Bond Covenants, see White Paper, Improving Covenant Protections in the Investment Grade Market (December 17, 2007), published by the Credit Roundtable in association with the Fixed Income Forum, available at www.creditroundtable.org. | N1 |
| Investment horizon | the period for which the fund intends to invest. There are two types of funds in terms of horizon: open-end and closed-end. | N4 |
| investment management agreement (IMA) | Important legal document that defines the relationship between an investor and the investment manager. It usually incorporates guidelines and objectives. | N6 |
| Investment Management Certificate (IMC) | UK benchmark examination for individuals engaged in discretionary or advisory management of investments, overseen by SIP. | N6 |
| investment manager | Organisation that invests assets on behalf of third parties for a fee. Can also refer to the individual responsible for day-to-day management of the assets, although this individual is more often referred to as a fund manager or portfolio manager. | N6 |
| investment manager guidelines | Statements contained in an investment management agreement that restrict, permit or prohibit a manager from certain investments when managing a specific mandate. | N6 |
| investment objectives | Results desired by an investor or fund. They may be expressed as a specific performance target or a general statement of intent. | N6 |
| investment performance | Total return earned on a portfolio of assets over a particular period. | N6 |
| investment performance measurement | Calculation and analysis of investment performance usually including a review of sector strategy and stock selection. Returns may be compared with a benchmark fund or index or with the actual returns achieved by other managers or portfolios. (See also WM Performance Services.) | N6 |
| investment philosophy | Set of principles or systems used by investors to govern the way they manage portfolios. | N6 |
| investment policy implementation document (IPID) | Document which serves as an adjunct to the SIP, setting out greater detail on, for example, the funds in which a scheme is invested, its strategic benchmark allocations and tolerance ranges for rebalancing around the central benchmark. | N6 |
| investment risk | a. Risk that an asset will not deliver the expected returns (or meet the objectives) for which it is held. b. Chance that a permanent loss will be sustained on an investment through company failure, default on loans, fraud or other factors. c. Volatility in the value of a security or market, usually measured as the standard deviation of returns over a given period. | N6 |
| Investment Risk | the uncertainty of realizing Economic Income as expected (with respect to amount and/or timing) | N7 |
| investment strategy | Investor’s long-term distribution of assets among various asset classes, taking into consideration, for example, goals of the trustee group, attitude to risk and timescale, etc. | N6 |
| investment structure | Way in which fund managers are employed to invest assets, in particular the type of investment managers employed (specialists, multi-asset, active or passive) and the number of managers employed. Also called investment manager structure. | N6 |
| investment team | Way in which fund managers are employed to invest assets, in particular the type of investment managers employed (specialists, multi-asset, active or passive) and the number of managers employed. Also called investment manager structure. | N6 |
| investment team | Group of individuals in an investment management organisation who are responsible for the construction of portfolios and the performance of funds under management. The team may include some or all of the following: a strategy specialist, economists, fund managers, investment analysts, equity and bond dealers, currency specialists, derivative specialists, property specialists and money dealers. | N6 |
| investment trust | Closed-end fund quoted on a stock exchange that holds/manages shares and investments in other companies. The closed-end nature means that the price of the fund fluctuates in line with supply and demand as well as in line with the value of the underlying investments. Thus, investment trusts may trade at a premium or discount (usually the latter) to the value of the underlying investments. | N6 |
| Investment Value | a Standard of Value considered to represent the value of an asset or business to a particular owner or prospective owner for individual investment or operational objectives. Also known as value to the owner | N7 |
| Investor | provider of capital for the long-term, as distinct from Lenders of short-term capital. Investors have rights, which Lenders don’t enjoy — and accept risks to which Lenders are not exposed. | N1 |
| Investor Presentation | a presentation (typically accompanied by or consisting of a Power Point document) by a company to a targeted group of Investors in that company. In the M&A context, Buyers, often in conjunction with the Target Company, routinely make an Investor Presentation to the Target Company’s and Buyer’s institutional Investors and stock analysts, either in a large meeting or in one-on-one sessions, explaining the merits of the Acquisition transaction. In the US, Investor Presentations often constitute statutory Prospectuses under the 1933 Act and Proxy soliciting materials under the 1934 Act, and therefore must be filed as such on the day of first use. Companies frequently also make Investor Presentations to ISS and Glass Lewis in order to elicit a favorable voting recommendation from each of these Proxy Advisory Firms. | N1 |
| Investor Relations | refers to the department or personnel that handle communications with a company’s shareholders or other investors, as well as with outside constituents interested in the company’s finances. IR personnel also set up one-on-one investor presentations. See also Public Relations. | N1 |
| Invitatio ad Offerendum | Invitation to treat, i.e. to make an offer. | N2 |
| Invoice Discounting | (see also Factoring) an asset-based working capital provision that allows businesses to get advances on cash they are due from customers, rather than waiting for those customers to pay. Confidential invoice discounting is invoice financing that can be arranged confidentially, so that customers and suppliers are unaware that the business is being advanced capital against sales invoices before payment is received | N5 |
| IP | Intellectual Property | N2 |
| IPO | See initial public offering. | N6 |
| IPO | Initial Public Offering. | N2 |
| IPO | acronym for Initial Public Offering 1. (UK) also called a Flotation, an IPO is the initial offering of the company’s Shares on an exchange | N1 |
| IPO / Initial Public Offering | initial public offering. In an IPO or flotation, a company offers its shares for sale on the stock exchange for the first time. New shares are issued so that the company can raise capital | N5 |
| IPO/Initial Public Offering | initial public offering. In an IPO, or flotation, a company offers its shares for sale on the stock exchange for the first time. New shares are issued so that the company can raise capital. | N4 |
| IR | see Investor Relations | N1 |
| IRR | See internal rate of return. | N6 |
| IRR | Internal Rate of Return | N2 |
| IRR | acronym for Internal Rate of Return | N1 |
| Irrevocable Undertaking | a binding agreement by a Target Company’s shareholder to accept a Takeover Offer. Bidders often seek Irrevocable Undertakings from the Target Company’s major shareholders to accept the Bidder’s proposed Offer to secure the success, or increase the success rate, of their Offer. See also IU, Lock-Up and Hard Undertaking | N1 |
| IRS | Internal Revenue Service. It is a branch of the US Department of Treasury and is the country’s tax collection agency. | N6 |
| ISDA | See International Swaps and Derivatives Association. | N6 |
| ISDA | acronym for International Swaps and Derivatives Association | N1 |
| ISDA Master Agreement | Bilateral derivative trading agreement containing general terms and conditions (such as provisions relating to payment netting, basic covenants, events of default and termination). The Master Agreement does not, by itself, include details of any specific derivatives transactions the parties may enter into. These will be covered in an adjoining Schedule and in the Credit Support Deed/Annex. (See also Credit Support Deed.) | N6 |
| ISDA Master Agreement | a master agreement in the form published by ISDA. Parties to Hedges use the ISDA Master Agreement which was designed by ISDA to be a balanced and easily administered agreement. The idea was to make an agreement so palatable to all that there would be few non-standard provisions required by any market player. The second generation ISDA Master Agreement was published in 1992 and the third generation was published in 2002. However, the 1992 form is more commonly used than the new form. The ISDA Schedule is part of the ISDA Master Agreement — an ISDA Master Agreement does not exist without an ISDA Schedule. Any two entities in the world that may want to enter into Hedges across from each other are supposed to have just one ISDA Master Agreement between them, which by itself has no economic effect until they enter into one or more transactions, which incorporate by reference their ISDA Master Agreement | N1 |
| ISDA Schedule | the part of an ISDA Master Agreement that includes the specific choices/elections made by the counterparties, as well as notice information and any exceptions and addenda the parties wish to make to the preprinted form | N1 |
| ISIN | International Securities Identification Numbering system advocated by the G30. The ISIN code is a unique 12-digit code given to a security and is used worldwide. | N6 |
| ISIN | International Securities Identification Number. | N2 |
| ISO | acronym for Incentive Stock Option | N1 |
| ISS | the largest US Proxy Advisory Firm and the pioneer in the field. ISS historically was first known as Institutional Shareholder Services and then as Risk Metrics. | N1 |
| issued share capital | Portion of a company’s authorised share capital that has been issued by the company (i.e. is publicly held). | N6 |
| Issued Share Capital | is the aggregate par value of Shares issued by a company | N1 |
| Issuer | Entity that issues securities | N2 |
| Issuer | the company which is the Seller (or Issuer) of Securities | N1 |
| issuing house | Financial institutions, often merchant banks, that act as intermediaries between companies seeking capital and the investors prepared to supply it. | N6 |
| IU | acronym for Irrevocable Undertaking | N1 |
| MOU / Memorandum Of Understanding | a statement in principle ( see also «LOI»). In practice, these terms are often used interchangeably | N4 |
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.