| L |
| M&A Term | Definition | Note |
| Levered Beta | a measure of Beta reflecting a Capital Structure that includes debt. Also known as equity beta. Contrast with Unlevered Beta | N7 |
| Liquidation Value | the amount, net of relevant costs (e.g., preparation and disposal), that would be realized if the business is terminated, and the assets are sold. See also Orderly Liquidation Value and Forced Liquidation Value. | N7 |
| Liquidity | the ability to quickly or readily convert an asset, business, or investment to cash at minimal cost. See also Marketability | N7 |
| large cap stock | Stock with a market capitalisation of among the largest within a market — for example, the capitalisation of one of the top 100 companies in the UK as represented by the FTSE 100 index. In the US, it is defined as a stock with a market capitalisation of over US$5 billion. (See also small cap stock, mid cap stock.) | N6 |
| last look | Practice of allowing one bank the opportunity to match the pricing arrangements available from other banks in the market, as a condition for their services being employed. | N6 |
| league table | Ranking table of the comparative performance of investment managers or funds in, for example, the Mercer MPA, Russell/Mellon or WM Company surveys. Also called peer group analysis. (See also Mercer Manager Performance Analytics.) | N6 |
| lease | Written agreement under which a property owner allows a tenant to use the property for a specified rent and period of time. | N6 |
| leasehold | Right to hold or use property for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract. | N6 |
| leverage | Use of borrowed money to over-invest a portfolio which magnifies both gains and losses. This may be achieved by derivative instruments. Also refers to the debt/equity ratio in a company’s balance sheet. | N6 |
| leveraged buyout | Use of borrowed money, usually from private equity investors, to purchase a company. A leveraged management buyout (LMBO) is the purchase of a company, using leverage, by the company’s management. (See also private equity.) | N6 |
| Local Government Pension Scheme (LGPS) | Public sector pension scheme for individuals working in local government, local authorities and other public services. | N6 |
| liabilities | Financial obligations — for example, money owed to banks or future pension payments — that must be met to satisfy the contractual terms of the obligation. Liabilities may be time-based (i.e. payable at a specific time) or contingent upon the occurrence of a future event (e.g. retirement, death). (See also asset/liability modelling.) | N6 |
| liability-driven investing (LDI) | Process whereby an investment strategy is set with explicit reference to a specific set of liabilities. | N6 |
| LIBID | London Interbank Bid Rate. The interest rate at which London based banks are prepared to borrow money from other banks, in a specified currency and for a specified period. (See also LIBOR.) | N6 |
| LIBOR | London Interbank Offered Rate. The interest rate at which London-based banks are prepared to lend money to other banks, in a specified currency and for a specified period. (See also LIBID.) | N6 |
| LIBOR-LIBID spread | Difference between the interest rates at which banks will lend to and borrow from one another, typically at least 12.5 bps but sometimes wider (especially for longer periods). This spread is important in swap dealing since cash deposited by companies seldom earns more than LIBID and the floating side of most swaps requires payment of LIBOR. | N6 |
| life company fund | Pooled fund that is operated by a life assurance company. Such funds are similar to unit trusts except that investors own a life assurance policy rather than units. | N6 |
| lifestyle/lifecycle | Adjustment of a member’s defined contribution plan asset allocation in line with set measures, for example, years to retirement. The purpose is to reduce risk of loss of pension-buying power as the member approaches retirement. | N6 |
| LIFFE | See London International Financial Futures and Options Exchange. | N6 |
| limited partnership (private equity) | Structure typically used for private equity funds. Investors are limited partners. (See also general partner.) | N6 |
| limited price indexation (LPI) | Method commonly used to increase pensions in payment. The increase is based on the RPI with an annual cap of usually 5% or 2.5% per annum, and pensions are not reduced if the RPI falls over the year. | N6 |
| liquid market | Market with a high degree of liquidity, often resulting from a large number of buyers and sellers. There can be large variations in the liquidity of different equity markets, with the most liquid being the large international markets — New York, Tokyo and London. | N6 |
| liquidity | a. Degree to which an asset or portfolio is easily marketable or turned into cash. The most liquid equity stocks are those of the large blue chip companies quoted on the large international markets. Liquidity can be measured by considering trading volume relative to a company’s issued share capital. b. Proportion of liquid assets such as cash and short-term instruments in a portfolio. | N6 |
| liquidity premium | Additional return required to compensate an investor for an investment with lower liquidity than cash. Also known as liquidity risk premium. | N6 |
| listed (stock) | Stock traded on a registered stock exchange — for instance, the NYSE or the LSE. | N6 |
| listing | Acceptance of a security for trading on a registered exchange. | N6 |
| listing particulars | Detailed information a company is required to give about itself when it applies to be listed on a stock exchange. It is published in the form of a prospectus. | N6 |
| loan stock | Another name for a bond, normally used to denote loans issued by non government bodies such as companies. | N6 |
| loan-to-value (real estate) | Debt expressed as a percentage of property value. The greater the loan-to-value, the greater the amount of gearing employed. | N6 |
| London Interbank Offered Rate | See LIBOR. | N6 |
| London International Financial Futures and Options Exchange (LIFFE) | Largest UK futures and options market. | N6 |
| long bias | Long/short fund with a net long position and therefore positive exposure to an increase in the underlying market. | N6 |
| long bond | Bond that has more than 10 years to run to maturity. | N6 |
| long position | State of actually owning a security, contract or commodity. (See also short position.) | N6 |
| long/short fund | Hedge fund comprising a mixture of long and short positions in the same asset class or market. The net market exposure could be long or short (see market-neutral fund). A subgroup of long/short funds, also known as extension strategies and 120/20 or 130/30 funds, where the fund short sells — for example, 20% of the total value of the fund — and uses the proceeds to increase the fund’s long position. | N6 |
| low grade | Bond rating of lower than BBB, indicating some uncertainty as to the issuer’s ability to meet the bond’s obligations. (See also investment grade.) | N6 |
| LPI | See limited price indexation. | N6 |
| LSE | London Stock Exchange. | N6 |
| lump sum | Payment of a one-off amount as opposed to a series of periodic payments. Most pension funds allow members to take a lump sum on retirement in return for a reduced pension (a process sometimes called commutation). | N6 |
| Lawyer / M&A lawyer: | the specialised lawyers or corporate lawyers who write the contracts and formalise transactions. | N5 |
| LBO / Leveraged Buy-out | a buy-out partly financed with debt | N5 |
| Legal continuity | this term refers to the question whether the company’s existing contracts with customers, suppliers, staff, and authorities, etc., are to be retained after the acquisition. In a share deal, the shares of the company are sold, which is unlikely to affect the agreements. | N5 |
| Legal due diligence | the review of the legal situation of the company in the areas of company law, review of contracts, labour laws, intellectual property (IP), permits/licences, etc. Usually undertaken by the purchaser’s solicitors. | N5 |
| Leverage | the degree of debt financing used for an acquisition. | N5 |
| Limited company | a private company whose shareholders are legally responsible for its debts only to the extent of the amount of capital they invested | N5 |
| Liquidation Value / Wind up value | The amount available if all the assets of a business are sold off and converted to cash | N5 |
| List of parties / Schedule of parties | a list of parties is drawn up to obtain a clear overview of the advisors and members of the management of the buying and selling parties. The list records the contact details of the various people involved in the transaction | N5 |
| Loan Note | A form of vendor finance or deferred payment, in which the buyer acts as a borrower, agreeing to make payments to the holder of the loan note at a specified future date | N5 |
| LOI / Letter Of Intent | a statement of intent. A written document setting out the intentions of the parties. Typically, it is nothing more than an intention to continue negotiating and is often subject to only two binding clauses namely exclusivity and confidentiality | N5 |
| Lawyer/M&A lawyer | the specialized lawyers or corporate lawyers who write the contracts and negotiate | N4 |
| LBO/Leveraged Buy-out | a buy-out partly financed with debt | N4 |
| Leakage | when setting up an acquisition financing structure involving several national and/or international companies, it is important to ensure that the intragroup distribution of the profits, or the repayment of loans, results in a minimum of taxes (thus value) «leaking» by means of unrecoverable withholding taxes (taxation at source) or dividend taxes, for example | N4 |
| Legal continuity | this term refers to the question whether the company’s existing contracts with customers, suppliers, staff, and authorities (including licenses), etc., are to be retained after the acquisition. In a share deal, the shares of the company are sold, which only rarely has an effect on the agreements that the company has entered into ( see also Change of Control Clauses). In an asset deal, there is basically no legal continuity and all of the company’s agreements with customers, suppliers, etc., must be entered into again, or at least be formally continued by the acquiring entity. With regard to legal continuity, we will look at two matters: the branch, and TUPE. | N4 |
| Legal due diligence | the review of the legal situation of the company in the areas of company law, review of contracts, labor laws, intellectual property (IP), permits, etc. | N4 |
| Leverage | the degree of debt financing used for an acquisition | N4 |
| List of parties | a list of parties is drawn up in order to obtain a clear overview of the advisors and members of the management of the buying and selling parties. The list records the contact details of the various people involved in the transaction. | N4 |
| Locked box | a locked box mechanism is a price mechanism in which the price of the shares is determined on the basis of a historical accounting situation, rather than a future situation (closing accounts). The price is determined as a debt and cash free price, minus historical debt, plus cash, and adjusted for the working capital surplus or shortfall at that same historical time. In addition, it is contractually agreed that there cannot be any cash flowing out of the company (the locked box) in the form of the payment of dividends or management fees. All other cash movements remain within the company and are thus assumed to have no effect on value. This method can only be applied if the buyer can obtain a very good picture of the balance sheet of the company during the acquisition process. | N4 |
| LOI/Letter Of Intent | a declaration of intent. This term is used for the first written document setting out the intentions of the parties. Generally, it is nothing more than an intention to continue negotiating subject to only two binding clauses (i.e. exclusivity and secrecy). | N4 |
| Long list | the initial long list of potential buyers for the company | N4 |
| Long/Short position | going long, or having a long position, means taking a position in securities to speculate on an increase in the price of the securities. The opposite of going long is going short, which involves speculating on a decrease in the price of the securities. This is done by selling shares that are not already owned but which hopefully can be bought more cheaply at a later date. | N4 |
| LP/Limited Partnership | Anglo-Saxon funds are often set up as tax transparent limited partnerships with limited liability for the investors (the limited partners). These limited partnerships are often offshore partnerships for maximum legal flexibility. | N4 |
| Lock-up arrangement | shares subject to a lock-up arrangement cannot be traded before a certain date that is fixed at the time the relevant shares are issued. When this period has expired, the shareholders can sell their shares | N4 |
| LBO – leveraged buyout | “A leveraged buyout (LBO) is a transaction when a company or single asset (e.g., a real estate property) is purchased with a combination of equity and significant amounts of borrowed money, structured in such a way that the target’s cash flows or assets are used as the collateral (or “”leverage””) to secure and repay the borrowed money. Since the debt (be it senior or mezzanine) has a lower cost of capital (until bankruptcy risk reaches a level threatening to the lender[s]) than the equity, the returns on the equity increase as the amount of borrowed money does until the perfect capital structure is reached. As a result, the debt effectively serves as a lever to increase returns-on-investment. The term LBO is usually employed when a financial sponsor acquires a company. However, many corporate transactions are partially funded by bank debt, thus effectively also representing an LBO. LBOs can have many different forms such as management buyout (MBO), management buy-in (MBI), secondary buyout and tertiary buyout, among others, and can occur in growth situations, restructuring situations, and insolvencies. LBOs mostly occur in private companies, but can also be employed with public companies (in a so-called PtP transaction – Public to Private). As financial sponsors increase their returns by employing a very high leverage (i.e., a high ratio of debt to equity), they have an incentive to employ as much debt as possible to finance an acquisition. This has, in many cases, led to situations in which companies were “”over-leveraged””, meaning that they did not generate sufficient cash flows to service their debt, which in turn led to insolvency or to debt-to-equity swaps in which the equity owners lose control over the business to the lenders.” | N3 |
| Letter of intent (loi) | A letter signed by the target and potential acquirer, stating the intent to pursue a mutual agreement. The letter binds both parties to exclusivity and secrecy. | N3 |
| Liquid asset | An asset that can be converted into cash quickly and with minimal impact to the price received. Liquid assets are generally regarded in the same light as cash because their prices are relatively stable when they are sold on the open market | N3 |
| Liquidation value | The amount which is available if the assets of the business are sold off and converted to cash | N3 |
| Lock-up arrangement | An arrangement between the target and potential buyer. When purchase negotiations are in a more advanced stage, the acquirer may require a commitment from the seller that he is not going to sell his shares to a third party. “Locking up” the shares will provide an assurance to the seller that he can continue to invest time and resources into buying the target. There are numerous variations in the extent to which the shares are locked. | N3 |
| Locked box | “A ‘locked box’ is a deal closing mechanism. The seller and acquirer agree on a price for the target. The target is the proverbial ‘box’. The following items are put into the box: – the equity value of the company (a debt- and cash free valuation, based on historical financials) – external debt on the balance sheet – cash on the balance sheet – working capital adjustment in plus or in minus, comparing the average working capital, with that as of the day of locking the box – other items resulting from due diligence and negotiations Buyer and seller agree on the value of the items in the box, and the box is then ‘locked’. At this time, the deal has not yet been completed, but there can be no longer any leakage from the box. The economic activities of the target continue, invoices are paid and received, salaries are paid, but no money leaves the box, as it would if dividends were paid, or the current account with owners or managers would be drawn on. Once the deal closes, there is no need for any closing accounts to be made and negotiated upon.” | N3 |
| Long list | The full list of potential buyers at the start of a selling process | N3 |
| Large Cap | 1. Transactions with a deal value exceeding EUR 500 million (Thomson Reuters). This is not a fixed size, however; other thresholds are also used in this context (see also Small Cap; Mid Cap). 2. “Large Cap” can also refer to companies with a particularly high market capitalisation. | N2 |
| LBO | Leveraged Buy-out. | N2 |
| Leakage | Outflow of cash after the effective date agreed under a Locked Box mechanism; unless this is Permitted Leakage, the seller must make up the amount involved. | N2 |
| Leaver | Shareholders and / or managers who leave a firm prematurely; leaver provisions are often included in agreements on management share schemes, with participation being tied to continuation of employment with the company. The specific leaver status (Good Leaver,Bad Leaver) is associated with certain legal consequences, usually regarding the size of severance payments and the possibility of exercising a Put Option or Call Option. | N2 |
| Legal Due Diligence | This involves examining a company’s legal relationships and risks. The circumstances of the particular case determine the focus of analysis. As a minimum, legal due diligence generally covers corporate law issues, in particular the Chain of Title in the case of a Share Deal. It very often includes an examination of aspects relating to employment law, competition law, real estate and environmental law. It may also cover intellectual property rights and contracts with customers and suppliers (e.g. with regard to any Change of Control Clause). | N2 |
| Legal Opinion | Opinion prepared by a law firm in relation to a specific legal issue. | N2 |
| Letter of Comfort | Comfort Letter. | N2 |
| Letter of Credit | Documentary credit; a directly enforceable, conditional payment guarantee issued by a bank. The bank commits to making the relevant payment if it is presented with documentation that is “letter of credit-compliant” (i.e. in due form) (see also Standby Letter of Credit). | N2 |
| Letter of Engagement | Agreement between client and advisor (e.g. a law firm) covering in particular the scope of the work to be carried out, the fee and liability aspects. | N2 |
| Letter of Intent (LoI) | A document (usually drafted without legally binding effect) in which the parties identify the key points of the deal and express their willingness to conduct further negotiations. A letter of intent can also include binding elements (for example in relation to confidentiality or exclusivity) (see also MoU and Preliminary Draft). | N2 |
| Level Playing Field | Equal information, no information imbalance; Vendor Due Diligence can be used to eliminate the information imbalance that exists between buyer and seller. | N2 |
| Leveraged Buy-out (LBO) | Acquisition of a company using a large amount of debt capital; the collateral for the loans is provided by the Target itself, in part or in full. | N2 |
| Leverage Effect | This usually refers to a situation in which a company’s high debtto- equity ratio means that the return on equity can considerably exceed the return on investment; however, the risk is also greater. | N2 |
| Liabilities | Collective term for obligations and risks of all kinds. | N2 |
| Liability Cap | Limit on liability, often agreed in connection with warranties (Representations & Warranties) and frequently based on a specific percentage of the purchase price. Different liability caps may apply to breaches of different types of warranties (taxes, environment, Title). If no liability cap is agreed, liability for breach of warranty is unlimited under German law. | N2 |
| License-in | Refers to obtaining licences from third parties for use within a company. | N2 |
| License-out | Refers to the granting of licences to third parties. | N2 |
| Lien | A security interest over a movable or immovable object; examples include a pledge or mortgage. | N2 |
| Limitation Language | Wording that imposes limitations on the payment obligation in connection with collateral security; commonly used with regard to upstream collateral (provided by a subsidiary for the parent company’s liabilities) in order to protect the subsidiary’s share capital. Also refers to limitations in a share or asset purchase agreement on the seller´s liability for breach. | N2 |
| Limited Liability Company | Companies with limited liability exist in many different jurisdictions; the German variant is a Gesellschaft mit beschränkter Haftung, or GmbH. While limited liability is a shared feature of such companies, they can differ significantly in other respects, depending on the jurisdiction. | N2 |
| Limited Partner | A partner in a Limited Partnership whose liability is limited to the extent of his ownership share. Limited partners are found in many jurisdictions, but their exact status can differ significantly from country to country. | N2 |
| Limited Partnership | A limited partnership comprises partners with unlimited personal liability (General Partner) and with limited liability (Limited Partner). Limited partnerships are found in many jurisdictions, but can differ significantly from country to country. | N2 |
| Liquidation Preference (Right) | First right to the proceeds of an Exit by way of liquidation. This mechanism may be used to ensure that a specific investor gets back the full amount of his investment before Pro Rata distributions are made to other shareholders. | N2 |
| Listing | Admission of a security to stock market trading. | N2 |
| Locked Box | Mechanism for establishing the purchase price; the price is usually based on the most recently available audited financial statements (and in particular is not adjusted at a later date (Cash Free / Debt Free)). No cash may be taken out of the company (Leakage) until the transaction has been completed, apart from defined exceptions (Permitted Leakage), e.g. payments in the normal course of business to cover wages, taxes, etc. The buyer’s interest in ensuring that no cash is extracted is addressed through Non-leakage Provisions. The locked box model is favoured by Financial Investors when selling and necessitates thorough Financial Due Diligence. | N2 |
| Lock-up (Period) | Holding period during which shares may not be sold; often used to tie management or key investors to the company for a specified period with the aim of boosting investor confidence. | N2 |
| Lock-up (Period) | Holding period during which shares may not be sold; often used to tie management or key investors to the company for a specified period with the aim of boosting investor confidence. | N2 |
| LoI | Letter of Intent. | N2 |
| Long List | List of all potential buyers for a company. Usually compiled by M&A advisors or an investment bank as part of an Auction Process, based on general information. | N2 |
| Long-stop Date | Date defined by contract as the latest point in time at which the acquisition can be completed. All the conditions for completion must be satisfied by this date, otherwise the parties can withdraw from the deal. The purpose of agreeing a long-stop date is to unmake a contract which is not completed. | N2 |
| Loss Carried Forward | Accounting technique that applies a loss from a previous year to profits in a subsequent year. | N2 |
| Ltd. | Private Company Limited by Shares. | N2 |
| LuxCo | Common term / abbreviation for a company established under Luxembourg law. A company of this type is often included in the transaction structure for tax reasons. | N2 |
| LBO | acronym for Leveraged Buyout | N1 |
| LBO Funds | another name for a Private Equity Sponsor | N1 |
| LBO Shops | another name for a Private Equity Sponsor | N1 |
| Lead Director | see Lead Independent Director | N1 |
| Lead Independent Director | a Lead Independent Director is an Independent Director selected by a company’s Independent Directors as their liaison to the CEO/Chairman and senior Management. A Lead Independent Director will chair executive sessions of the Board at which only Independent Directors are present. The Lead Independent Director also sometimes works with the CEO/Chairman of the Board on agendas for Board meetings. Think of a Lead Independent Director as an Independent Chairman “lite.” | N1 |
| Lead Investor | a financial Investor who leads a consortium of financial Investors or initially makes an investment on its own and invites other financial Investors later to Co-Invest | N1 |
| Lead Lender | the bank that negotiates a Financing Package and takes a lead role in syndicating the Financing | N1 |
| League Table Credit | league tables are lists kept by certain institutions and publications, such as Thomson Financial and Bloomberg, which track deal volume and deal size by Investment Banks and law firms. League Table Credit refers to receiving credit for a specific deal for ranking purposes. | N1 |
| Leaver Scheme | regulates in a Management Participation contract the legal consequence of the withdrawal of a manager from his/her function and/or his/her employment contract. See Good Leaver and Bad Leaver. | N1 |
| Legal Opinion | a lawyer’s written explanation answering one party’s judicial subjects in the context of a transaction or financing | N1 |
| Lender | the financial institutions party to a Credit Agreement as Lenders (i.e., the ones lending the money) | N1 |
| Letter of Credit | a bank’s payment promise, mostly arranged like a Bank Guarantee | N1 |
| Letter of Intent | these letters may closely resemble a contractual letter, but are usually no more than non-binding expressions of intention which may include binding provisions which would otherwise be included in separate agreement, i.e., No Shop, Confidentiality Agreement, and which often outline the terms of a transaction prior to definitive and more detailed documentation. See also Indication of Interest and LOI. | N1 |
| Letter of Transmittal | the document used to tender or deliver Securities in a Tender Offer, Exchange Offer or Merger, and to convey ownership of the Securities when accepted by the Bidder or its agent. A Letter of Transmittal will often be provided by the Paying Agent or Exchange Agent and will contain detailed instructions for delivery. | N1 |
| Letter to Banks, Brokers | a document frequently included in Tender Offer or Exchange Offer materials which asks intermediaries to forward the bidding papers to Beneficial Owners of the Security | N1 |
| Letter to Clients | a form of document for use by banks, brokers and similar intermediaries transmitting bidding papers to Beneficial Owners of the Security | N1 |
| Lever Up | loosely speaking, to incur significant additional indebtedness | N1 |
| Leverage | describes the use of various financial Instruments or borrowed capital, such as margin, to increase the potential return of an investment. Leverage is the amount of debt used to finance a firm’s assets. A firm with significantly more debt than equity is considered to be highly leveraged. | N1 |
| Leverage | describes the use of various financial Instruments or borrowed capital, such as margin, to increase the potential return of an investment. Leverage is the amount of debt used to finance a firm’s assets. A firm with significantly more debt than equity is considered to be highly leveraged. | N1 |
| Leverage Ratio | an important measurement of a company’s Leverage, which compares the company’s overall debt level as of a particular date to the EBITDA (or another measure of cash generation, such as Adjusted EBITDA) generated over the most recently completed four-quarter period. Investors and analysts care about the Leverage Ratio because it measures the company’s debt level against the company’s cash performance measure. Credit agreements traditionally (although not always) have Maintenance Covenants requiring a Borrower to maintain a certain Leverage Ratio. | N1 |
| Leveraged Buyout | an Acquisition transaction in which a Sponsor uses debt as a principal source of cash to buy a Target Company. If the debt is Secured, the Security consists exclusively of the Target’s Stock and assets, and neither the Sponsor nor its LBO Funds are liable for the debt. The LBO transaction structure allows Sponsors to finance large Acquisitions on a non-recourse basis to the Sponsor and the LBO Funds it manages and to use a minimum amount of equity capital from its managed funds. The use of debt as a principal source of funds (i.e., the Leverage supplied by debt) has the effect of enhancing the transaction’s return on equity as and when the Sponsor cashes in by selling the Target Company at a price higher than its cost basis. Since the Debt Financing has a first call on sale proceeds, the leveraged structure will lead to a higher negative return on equity to the managed funds if the Target Company is sold for an amount less than its cost basis. | N1 |
| Leveraged Buyout Firm | another name for a Private Equity Sponsor | N1 |
| Leveraged Finance | Debt Financing that often refers to the incurrence of indebtedness an amount greater than would be considered “normal.” Thus, Leveraged Financing is riskier and has a higher interest rate than ordinary borrowing. Sometimes, the term Leveraged Finance is used only with respect to the issuance of non-Investment Grade debt. Among other things, Leveraged Finance is utilized in connection with LBOs and Leveraged Recapitalizations. | N1 |
| Leveraged Recapitalization | a transaction in which an unusually large dividend is paid to existing shareholders from borrowed funds, so that the resulting entity has a very different Capital Structure, in which debt has been substituted for most of the previously recorded equity on the company’s Balance Sheet. From a financial perspective, the transaction creates the same kind of leveraged structure as would result from a conventional LBO, but because the public shareholders have received a dividend rather than a cash-out Acquisition payment, they will retain an equity stake in the now highly leveraged company. The accounting treatment of a Leveraged Recapitalization also differs from an Acquisition under the Purchase Accounting rules of GAAP. | N1 |
| Levered Recap | shorthand for a Leveraged Recapitalization | N1 |
| LIBOR | acronym for the London Interbank Offered Rate, which is the average interest rate leading banks in London estimate that they would be charged if borrowing from other banks. See also EURIBOR | N1 |
| Limitation Period | the time period within which court action must be commenced in respect of a contract, tort or any obligation contained in a deed. Similar to a Statute of Limitations in the US. | N1 |
| Limited Liability Company | Limited Liability Company: a type of company and organizational form which combines many of the attributes of a corporation with attributes of a Partnership. Like corporations, the equity holders in a Limited Liability Company (called Members) generally do not have personal liability for the company’s liabilities and obligations. Members’ liability is a fixed sum, usually limited to the investment in the company or Partnership made by the individual Member. 1. (US) like Partnerships (and unlike corporations), Limited Liability Companies are by default Pass-Through entities (although they can elect to be taxed like taxable corporations). Limited Liability Companies are created under state or national law (for example, in Delaware, by filing a certificate of forma+D135tion with the Delaware Secretary of State) and are typically governed by an agreement among the company’s Members (often called a Limited Liability Company Agreement, Membership Agreement, Members’ Agreement or Operating Agreement). 2. (UK) such a company is either a private or publicly limited company 3. (FRA) the closest limited liability forms of company under French law would be société anonyme 4. (HKG) the term refers to a company where the liability of its Members is limited. There is no equivalent concept to a US Limited Liability Company which has the attributes of a Partnership. 5. (SAU) société par actions simplifiées (SAS) and société à responsabilité limitée (SARL) 6. (UAE) such companies are formed under the UAE Companies Act |
N1 |
| Limited Liability Limited Partnership | a type of Limited Partnership where the General Partner is not personally liable for the liabilities and obligations of the Partnership. To qualify as a Limited Liability Limited Partnership, a Limited Partnership generally has to comply with the applicable statutory requirements in its state or other jurisdiction of formation. | N1 |
| Limited Liability Partnership | a type of Partnership which combines many of the attributes of a corporation with attributes of a Partnership, in which some or all of the Partners have limited liability. To qualify as a Limited Liability Partnership, a Partnership generally has to comply with the applicable statutory requirements in its state or other jurisdiction of formation. | N1 |
| Limited Partner | a partner in a Limited Partnership or Limited Liability Limited Partnership which generally does not have personal liability for the liabilities and obligations of the Partnership. | N1 |
| Limited Partnership | refers to a Partnership with Limited Partners and at least one General Partner. To qualify as a Limited Partnership, a Partnership generally has to comply with the applicable statutory requirements in its state or other jurisdiction of formation. | N1 |
| Liquidated Damages | a specified amount, or amount determined pursuant to a defined formula, which is payable by one party to a contract to another, in the event the other party does not meet a contractual obligation. Generally entails an acknowledgement by the parties that the recipient will incur damages as a result of the other party’s failure to meet its obligations and that the actual damages would be difficult or impossible to determine. Liquidated Damages should also be a reasonable approximation of actual damages, or the Liquidated Damages may be unenforceable as a penalty under applicable law and/or a court may modify the amount. | N1 |
| Liquidation | see Winding Up | N1 |
| Liquidator | a person appointed by the shareholders or unsecured creditors of a company or by a court order, to manage the Winding Up of a company by selling off its assets | N1 |
| Liquidity | the degree to which an asset can be converted into cash. While US treasuries are considered highly liquid, a 49 percent interest in a Malaysian paper mill probably is not. Liquidity can also refer to a company’s ability to meet its near-term payments. Also, where companies are publicly quoted, on the stock market, their Shares are said to be liquid if they are readily bought and sold. Smaller, or less fashionable, quoted companies may find their Shares lack Liquidity. | N1 |
| Listed Company | the term given to any company whose Shares or Securities are traded on a regulated exchange (e.g., in the UK this would refer to a company admitted to the Official List and subject to the Listing Rules) | N1 |
| Listing and Quotation of Shares on SGX-ST | a process, following which such Shares can be traded on the exchange | N1 |
| Listing Approval | in the context of an IPO, refers to the approval, given by the relevant Stock Exchange or committee thereof (e.g., the Listing Committee of the Hong Kong Stock Exchange) for listing of, and permission to deal in, the Shares of a listing applicant; in the context of new Shares issued by a Listed Company, refers to the approval for listing of, and permission to deal in, the new Shares of the Listed Company given by the relevant Stock Exchange (e.g. Executive Director–Listing of the Hong Kong Stock Exchange) | N1 |
| Listing Manual | 1. (US) see, e.g., the NYSE Listed Company Manual or the NASDAQ Marketplace Rules 2. (UK) FSA published rules dealing with, among other things, the requirements for admission to listing of Securities and the ongoing obligations of Listed Companies in the UK 3. (DEU) rules published by the BaFin dealing with, among other things, the requirements for admission to listing of Securities and the ongoing obligations of Listed Companies in Germany 4. (ESP) rules in Royal Decree 1310/2005 and developed by each stock exchange. This Royal Decree partially develops Law 24/1988, of July 28, of the Stock Market, on admission to trading on official secondary markets, public offers of sale or subscription and the Prospectus required for such purposes, specifically the Spanish Securities Act. 5. (FRA) rules published by the AMF and in the French Commercial Code and French Monetary and Financial Code dealing with, among other things, the requirements for admission to listing of Securities and the ongoing obligations of Listed Companies in France 6. (HKG) see Listing Rules 7. (ITA) rules governing the requirements for admission to trading on the Italian Regulated Markets and ongoing obligations of Listed Companies as set forth in the regulation issued by Borsa Italiana S.p.A. and annexed instructions 8. (SAU) the rules in the Kingdom of Saudi Arabia issued by the Board of the Capital Market Authority pursuant to its Resolution Number 3-11-2004 dated 20/8/1425H Corresponding to 4/10/2004G (as amended) 9. (SGP) SGX-ST Listing Manual 10. (UAE) the UAE has two stock exchanges, the DFM and ADX. Refer to decision No. 12 of 2000 of the SCA. |
N1 |
| Listing Rules | see Listing Manual 1. (HKG) this is a reference to the “Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited” |
N1 |
| LLC | acronym for Limited Liability Company | N1 |
| LLP | acronym for Limited Liability Partnership | N1 |
| Loan Note | financial Instruments evidencing the existence of a debt and the promise by the Issuer to repay the amounts due under the Notes to the noteholder(s). In the M&A context, Loan Notes are often used as a method of subscription investment by a Private Equity Investor or are issued as consideration to selling shareholders in order that consideration is released to them over a period of time | N1 |
| Loan-to-Own-Strategy | an investment strategy in which an Investor initially acquires a company’s debt, transforms it into equity capital of the company and thereby secures the control of the company. See also Debt for Equity. | N1 |
| Locked Box | a Completion mechanism whereby the amount payable by the Buyer is calculated off a historical Balance Sheet of the Target Company. Therefore debt, cash and Working Capital are known at the date of signing rather than in a standard Completion mechanism where accounts are prepared post-Completion with the amounts of cash, debt and Working Capital. See also Purchase Price Adjustment. | N1 |
| Lock-In Period | another name for a Lock-Out Period | N1 |
| Lock-Out | often required by the Underwriters in connection with IPOs and other equity offerings, a Lock-Out is a restriction on the ability of officers, directors, large stockholders and other Insiders, as well as the Issuer, to issue or sell new Equity Interests during a certain period following the Closing of the offering. The purpose of the Lock-Out is to help stabilize the price of the Equity Interests following the offering by controlling the supply into the market. In some jurisdictions, including Hong Kong, called a Lock-Up | N1 |
| Lock-Out Period | the period of time during which a Lock-Out applies | N1 |
| Lock-Up | a generic term for an agreement or arrangement that gives a favored party an exclusive right or privilege that cannot be obtained by another party. For example, a Lock-Up of votes means that the holder of the right to vote has agreed to vote in a certain way or in accordance with instructions from another party. A Lock-Up of an Acquisition opportunity means that the Target Company will not be able to be acquired by any person not designated in the Lock-Up. A Lock-Up of a financing source means that no other party will be able to access financing from that source. See Shareholder Lock-Up. 1. (HKG) generally refers to exclusivity arrangements; however, also refers to a restriction on the ability of Controlling Shareholders and other insiders to sell or otherwise dispose of any interest or right in Shares during a specified period. See Lock-Out. |
N1 |
| LOI | acronym for Letter of Intent | N1 |
| London Stock Exchange | one of the largest stock exchanges in the world, the LSE has a number of primary markets, including the Main Market and AIM | N1 |
| Long Stop Date | another name for Outside Date | N1 |
| Long Term Incentive Plan | an award of Shares to an employee at no cost, subject to the fulfillment of certain conditions, such as meeting performance targets or continuing employment with the company | N1 |
| LP | acronym for either a Limited Partner or a Limited Partnership | N1 |
| LSE | acronym for the London Stock Exchange | N1 |
| LTIP | acronym for a Long Term Incentive Plan, usually comprising Share Option awards in favor of key Management | N1 |
| LTM | acronym for “latest twelve months” which refers to an accounting period consisting of a recent 12 consecutive months. The term is usually used to refer to the most recently completed fiscal four-quarter period (even if that is not the latest 12 months). LTM also sometimes refers to the latest 12 months, even if not coincident with fiscal quarters. Compare NTM. | N1 |
| Lucite | see Deal Toy | N1 |
| Luxco | a company incorporated in Luxembourg, often used in European Leveraged Buyouts for tax efficiency reasons, including Luxembourg’s extensive network of Double Taxation Treaties and favorable Withholding Tax rules (attributes shared by a number of other jurisdictions in Europe), and now increasingly for Security interest efficiency reasons under Double Luxco Structures | 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.