|N|
| M&A Term | Definition | Note |
| (Non) Binding | the binding character of clauses or the entire agreement is a matter that requires particular attention when preparing documentation to be exchanged by the parties. Non-binding statements are often chosen at an early stage and changed into more binding statements/documents as the sale process progresses. | N4 |
| NAFTA | See North American Free Trade Agreement | N6 |
| Naked | a naked, or uncovered, call option gives the purchaser the right to buy shares that are not yet in the possession of the writer. | N4 |
| naked call | Where the writer of a call option (the “seller”) does not own the underlying security (this is also known as an “uncovered” position). This is a bearish position because the writer expects the stock price to fall. By not holding the underlying security, the writer is essentially exposed to an unlimited loss. | N6 |
| Naked No Vote | where the Target Company shareholders vote against the proposed Business Combination at the Special Meeting in the absence of a Superior Proposal | N1 |
| naked put | Where the writer of a put option (the “seller”) does not own the corresponding short position in the underlying security (this is also known as an ”uncovered” position). This is a bullish position because the writer expects the stock price to rise. By not holding the underlying security, the writer is essentially exposed to a loss equal to the value of the options’ strike price. | N6 |
| Named Executive Officers | a Public Company’s principal executive officer, principal financial officer and three most highly compensated executive officers other than the principal executive officer and principal financial officer. See NEOs. | N1 |
| narrow market | Market with little trading activity. Because of the low volume of trading it displays high volatility, high spreads and low liquidity. | N6 |
| NASDAQ | National Association of Securities Dealers Automated Quotations System. US stock exchange that has a particular emphasis on developing and technology companies. The NASDAQ Composite Index is an index covering all stocks in the NASDAQ market. | N6 |
| NASDAQ | the National Association of Security Dealers Automated Quotation is the largest US stock market in terms of companies listed and number of shared traded. Launched in 1971, NASDAQ is home to more than 82 percent of all the technology listings in the US. It is operated by the NASDAQ Stock Markets Inc., a wholly-owned subsidiary of the National Association of Security Dealers. | N1 |
| Nasdaq Dubai | the Stock Exchange based in the DIFC regulated by the DFSA | N1 |
| National Employment Savings Trust | National pension scheme set up to help people on low to moderate incomes with no access to proper employment pension schemes save for an income in retirement. (See also Personal Accounts Delivery Authority.) | N6 |
| national income (NI) | Annual income earned by a country for its production of goods and services. | N6 |
| National Settlement Depositary | Russia’s Non-Bank Credit Institution CJSC “National Settlement Depositary” (Национальный расчетный депозитарий) was nominated as the central securities depository by the Federal Service for Financial Markets (Regulation No. 12-2761/ПЗ-И) on November 6, 2012. The National Settlement Depositary is Depositary in 30 percent of cases. See also Depository. | N1 |
| NAV | See net asset value. | N6 |
| NAV | acronym for Net Asset Value | N1 |
| NDA | Non-disclosure Agreement. | N2 |
| NDA | acronym for Non-Disclosure Agreement | N1 |
| NDA/Non Disclosure Agreement | an undertaking to ensure secrecy. In this agreement, the parties confirm that they will not misuse the information exchanged in the context of merger talks. An NDA also often includes other provisions, such as an agreement not to poach staff during the negotiations | N4 |
| NED | acronym for Non-Executive Director | N1 |
| Negative Assurance | a reference to what the auditors say in the Comfort Letter about the quarterly financials and the period since the end of the last quarter (hopefully without material changes). Negative Assurance is a “we didn’t see anything” standard, not a promise that everything is okay. 1. (ITA) based on International Standard on Assurance Engagements (ISAE) 3400, as applied by Italian Auditors, a Negative Assurance is also expressed in respect of prospective financial information: “Based on our examination of the evidence supporting the assumptions, nothing has come to our attention which causes us to believe that these assumptions do not provide a reasonable basis for the projection…” |
N1 |
| Negative Assurance Letter | a letter provided by both Issuer’s and Underwriters’ counsel at the Closing of a Securities offering. The letter states that based on the lawyers’ Due Diligence efforts, nothing has come to their attention indicating that the Prospectus (for registered deals) or the Offering Memorandum (for non-registered deals) contains any misstatements of material facts or any material omissions. 1. (US) This is not an opinion, but is sometimes incorrectly referred to as a “10b-5 opinion.” Also known as a “10b-5 letter.” |
N1 |
| negative convexity | When a bond’s price rises less for a downward move in yield than its price declines for an equal upward move in yield. | N6 |
| Negative Covenant | legalese for an agreement not to do something. Negative Covenants governing the Target Company’s operations during the interim period are also sometimes referred to as Interim Operating Covenants because they restrict the conduct of the company between the signing and Closing of an Acquisition Agreement. | N1 |
| negative yield curve | Described as being negative (or inverted) when the yields on short-term bonds are higher than the yields on long-term bonds. This can imply that interest rates are expected to decline, or that there is excess demand for long-term bonds. | N6 |
| Negotiated Sale | In a negotiated sale, the buyer and seller negotiate exclusively with each other, unlike in an Auction Sale. | N2 |
| NEOs | acronym for Named Executive Officers | N1 |
| NEST | See National Employment Savings Trust. | N6 |
| Net Asset Value | the difference between a business’ total assets and liabilities restated at a particular Standard of Value rather than accounting book values | N7 |
| Net Asset Value | value of an entity’s assets minus its liabilities. See NAV. | N1 |
| net asset value (NAV) | Total market value of assets minus its total liabilities. The unit price of an open-ended pooled fund is calculated with reference to the NAV of the fund (the NAV of a unit being the NAV of the fund divided by the total number of units in the fund). The market price of shares in a closed-end pooled fund may stand at either a discount or premium to NAV. (See also closed-end fund.) | N6 |
| Net Asset Value (NAV) (see also shareholders’ funds) | is the value of an entity’s assets minus the value of its liabilities. Commonly seen as shareholder’s funds on an accounting balance sheet | N5 |
| net asset value (real estate) | Gross asset value less the value of debt (leverage) in a property fund. (See also gross asset value [real estate].) | N6 |
| Net Assets | The net assets of a company are calculated by deducting liabilities and provisions from total assets. | N2 |
| Net Book Value | the difference between a business’ total assets and liabilities at accounting book values (synonymous with book equity). With respect to a specific asset, this is the original capitalized cost less accumulated amortization, depreciation, depletion, allowances or impairment | N7 |
| Net Cash Flow to Equity | Cash Flow available to equity holders after funding business operations, paying taxes, making necessary capital investments, and servicing debt and Debt Equivalents, Hybrid Securities, and non-equity claims. See also Net Cash Flow to Invested Capital. Sometimes referred to as free cash flow to equity | N7 |
| Net Cash Flow to Invested Capital | Cash Flow available to all security holders after funding business operations, paying taxes, and making necessary capital investments. See also Net Cash Flow to Equity. Sometimes referred to as free cash flow to invested capital or free cash flow to the firm. | N7 |
| Net debt | there is no official definition of net debt, which means it is important to define it properly in the LOI and SPA. The net debt generally comprises financial liabilities (in a broad sense) minus cash. Financial liabilities include the following: loans and associated liabilities (including interest that is current but not yet payable), bills of exchange, repayable subsidies, pensions and other longterm commitments to staff, commissions giving rise to cash outflows within the foreseeable future, off-balance sheet commitments that can be considered equivalent to debt, and certain leasing debts. | N4 |
| Net debt | “Since companies are often valued ‘debt and cash free’, it is important to define what the debt is. Often the buyer will eventually take over some debt items, so a clear definition and substantiation of that debt is essential. A financial due diligence typically checks the net debt. Elements of net debt are: in plus: – financial liabilities such as loans – pensions – repayable subsidies – long-term commitments such as commissions – off-balance sheet commitments – leasing debts in minus – cash – cash-like items” | N3 |
| Net Debt | amount of a company’s total debt minus its cash and Cash Equivalents | N1 |
| Net Debt / Cash Free | Cash Free / Debt Free. | N2 |
| net domestic product | Gross domestic product after deductions for the depreciation of a country’s capital goods. | N6 |
| Net Equity | A company’s reported equity capital (see section 266 (3) A. of the HGB (German Commercial Code)). | N2 |
| net income | Company’s gross sales revenues minus taxes, interest, depreciation and other expenses. | N6 |
| net operating income (NOI) | Gross sales revenue minus operating expenses. There is no deduction for taxes or interest. | N6 |
| net position | Where a fund can short sell securities, the net position refers to the level of a fund’s exposure to market risk. For a long/short equity fund, if a fund is 100% long and 30% short, then the net position is 70% (also known as net exposure). Traditional investment funds are 100% long. | N6 |
| Net Present Value | the value, as of a specified date, of future cash inflows less cash outflows (including the cost of initial investment) calculated using a Discount Rate | N7 |
| net present value (NPV) | Present value of expected future cash flows minus any initial and ongoing investment costs. Often used in capital budgeting to determine whether or not to make an investment (if negative, the investment should not be made). | N6 |
| Net Working Capital | Net current assets. | N2 |
| New York Stock Exchange (NYSE) | Largest stock exchange in the US. | N6 |
| Newco | A new company formed to buy a Target by the Buyer, and used to acquire an operating subsidiary, by buying the controlling interest in the Target. A new company is used as it is clean of historical liabilities and protects the Buyer from direct investment in the Target | N5 |
| NewCo | Common term for a new entity established as part of and for the purposes of a transaction. Often an SPV and Shelf Company. | N2 |
| Nikkei | Tokyo Stock Exchange’s headline index. It covers only a relatively small number of stocks (225). | N6 |
| nil cost (specific to derivatives) | Simultaneous purchase and sale of options on the same underlying security for the same period with the same premium but at different strike prices. | N6 |
| Nil Merger Premium | a Merger where the shareholders do not receive a premium over the market value of their Shares before the transaction is announced | N1 |
| No Leakage Provision | in the context of a Locked Box concept, the Purchaser requests protection from any value drain of the company between signing and Closing by restricting the Seller from implementing certain measures, such as dividend Distributions and other distributions of proceeds, granting of loans to the company’s shareholders, and agreement on certain services not at arm’s lengths | N1 |
| No Offer Announcement | an announcement, or informal statement, which a party will usually be held to for six months, referring to a decision not to make an Offer under Rule 3.7 of the HK Takeovers Code | N1 |
| No Poach | See Non-Solicitation | N1 |
| No Shop | provisions found in a Public Company Merger Agreement (except in the UK) which preclude the Target Company from having any dealings with a Competing Bidder, unless specifically permitted by the Fiduciary Out provisions (if any) contained in the Public Company Merger Agreement. In Acquisitions involving an exchange of one company’s Stock for the other’s, particularly where the companies are relatively similarly sized, each party to the Acquisition Agreement may be subject to a No Shop provision. | N1 |
| No Talk | a name for a No Shop provision which does not contain a Fiduciary Out. No Talk is a term rarely used today, because beginning in the late 1990s Delaware law made inclusion of a Fiduciary Out a virtual requirement for Acquisition Agreements involving Target Companies organized in Delaware, and other state corporate laws are assumed to be similarly interpreted. Note that under very limited circumstances Delaware law may permit use of a No Talk version of the No Shop. | N1 |
| No Teaming Provisions | a provision frequently found in a Non-Disclosure Agreement between a potential Target and a potential Bidder providing that the potential Bidder will not contact or have any type of discussion with other potential Bidders without the Target Company’s consent. A No Teaming Provision is intended to preserve the Target Company’s ability to use an Auction Process to produce the highest Bid available by precluding formation of bidding syndicates or Bidder Groups among potential Bidders without the Target first determining that such a bidding syndicate will enhance the Auction Process. | N1 |
| NOI | See net operating income. | N6 |
| NOL | acronym for a net operating loss under the US Internal Revenue Code | N1 |
| NOL Pill | a Poison Pill intended to preclude Acquisitions of Shares of a company with significant net operating losses that might reduce or eliminate the company’s net operating losses. Typically, an NOL Pill has a five percent Trigger. NOL Pills have been upheld in Delaware. See Versata Enters., Inc. v. Selectica, Inc., 5 A.3d 586 (Del. 2010). | N1 |
| no-load | Without any sales charge. (See also front-end load.) | N6 |
| Nominal Cash Flows | Cash Flows that include the effects of inflation. Contrast with Real Cash Flows | N7 |
| nominal interest rate | Interest rate in monetary terms, unadjusted for inflation. (See also real interest rate.) | N6 |
| Nominal Rate of Return | a Rate of Return that includes the effect of inflation. Contrast with Real Rate of Return | N7 |
| nominal spread | Difference between the redemption yield on a specific bond, and the redemption yield of a gilt of the same maturity. Not considered a good measure of differential pricing, as it does not take into account how changes in the shape of the overall yield curve may impact on relative market values. (See also option-adjusted spread, Z-spread.) | N6 |
| nominal value | Of a bond, its par or face value on which interest and capital repayments are based. Of an equity, the book value at which the shares were issued. | N6 |
| Nominated Adviser | an adviser for companies listed on AIM that is approved by the LSE. AIM companies must retain a Nominated Adviser at all times. Also known as a Nomad. | N1 |
| nominee | Person or company that is registered as the owner of a security. The assets of segregated pension plans are usually held in nominee accounts which, for convenience, are registered in the name of the investment management company. However, the pension plan remains the beneficial owner of the securities. | N6 |
| Non disclosure agreement (NDA) | “an agreement where two interested parties pledge to retain secracy around the information they come into contact with. Signatories to NDA’s are potential acquirers, consultants, internal management. NDA’s may include additional clauses to specifically name areas of risk a leakage of a company’s assets, such as intellectual property, or valuable employees.” | N3 |
| Non-compete Clause | Prohibition on competition; various legal restrictions must be borne in mind when drafting such a prohibition. | N2 |
| Non-Compete Clause | a contractual restraint on competition | N1 |
| Noncontrolling Interest | an ownership interest that lacks Control of the business. Also known as minority interest or minority shareholding | N7 |
| Non-Disclosure Agreement | a generic name for an agreement by one party not to disclose publicly information provided by a second party. Non-Disclosure Agreements are very common in the M&A context and are almost an invariable feature of any Due Diligence process. Non-Disclosure Agreements in an M&A context typically also prohibit potential Bidders from publicly disclosing the existence of the M&A process and often impose Standstill restrictions on potential Bidders so that the Target Company can maintain control of the Auction Process. Also referred to as a Confidentiality Agreement or NDA. | N1 |
| Non-disclosure Agreement (NDA) | A contract by which the parties agree to treat negotiations (including the fact that the negotiations are taking place), their content, outcome and the documents made available as confidential. They undertake to keep confidential information secret and not to make it accessible to third parties or place it in the public domain. The agreement sometimes also stipulates how documents are to be treated after negotiations have ended (typically they are returned or destroyed; see also Confidentiality Agreement). Sanctions are often agreed for breaching the obligations arising from a non-disclosure agreement. | N2 |
| Non-Disclosure Agreement (NDA) / Confidentiality Undertaking | an undertaking to ensure discretion and secrecy. In this agreement, the parties confirm that they will not misuse the information exchanged in the context of sale/acquisition talks. An NDA also often includes other provisions, such as an agreement not to approach staff for a defined period, usually a couple of years | N5 |
| Non-Distributable Reserves | certain reserves such as a Share Premium Account, which companies are generally prohibited or restricted in distributing to shareholders 1. (FRA) in France, a legal reserve amounting to five percent of the Share Capital is mandatory in any form of commercial companies | N1 |
| non-diversifiable risk | Risk inherent in a particular market. Owning a greater number of securities from that market will not reduce (diversify away) this risk. Also known as systematic risk. | N6 |
| Non-embarrassment Clause | Anti-embarrassment Clause | N2 |
| Non-Executive Director | Non-Executive Directors are part-time directors but still share all the legal responsibilities of their executive directors on a company’s Board of Directors. Non-Executive Directors usually provide advice and assistance to executive directors as independent consultants or advisers, although their exact duties will depend on the nature of the company and their particular expertise. 1. (FRA) also used to describe directors who do not have the power to represent the company in interactions with third parties |
N1 |
| non-interest bearing note | Type of zero coupon bond. | N6 |
| Non-leakage Provisions | Provisions in the context of a Locked Box mechanism which are intended to prevent the outflow of cash between the effective date (the date used as the basis for establishing the purchase price) and Closing. | N2 |
| Nonoperating Assets | assets (or liabilities) not necessary to support the ongoing operations of a business. Sometimes referred to as redundant or surplus assets | N7 |
| Non-performing Loans | Loans where the borrower is in default, i.e. failing to meet his repayment commitments, or where the lender can terminate the loan agreement for good cause (see also Distressed Debt). | N2 |
| non-private customer | Category of investor (as required by the FSA) given limited protections under the conduct of business rule. (See also private customer.) | N6 |
| Non-Qualified Deferred Compensation Plan (NQDC Plan) | plan or agreement that defers the payment of compensation earned in one year to a future year. NQDC Plans must comply with or be exempt from Section 409A, otherwise deferred amounts will be subject to an excise tax and other penalties under 409A. | N1 |
| Non-Qualified Stock Option | see Stock Option. A Stock Option that is not an Incentive Stock Option. Non-Qualified Stock Options are taxed as ordinary income at the time of exercise on the difference between the grant price and the fair market value at exercise. | N1 |
| non-rated bond | Bond which has not been rated by a large rating agency (e.g. Moody’s or S&P) and therefore carries the risk of potentially being poor quality. | N6 |
| Non-reliance Letter | Exclusion of liability, such that no liability is accepted in respect of third parties for statements made in a Due Diligence Report or other report (e.g. if the report is forwarded by the client to other parties). This is due to the substantial liability risk that would otherwise be incurred, which would make it considerably more expensive to prepare a due diligence report or other kind of report. | N2 |
| Non-Solicitation | agreement not to poach or hire a company’s employees. See No Poach. Not to be confused with a Non-Solicitation Agreement in the Public Company Merger Agreement context. | N1 |
| Non-solicitation Clause | Employee poaching ban; i.e. one party agrees not to (actively) recruit (specific) employees (e.g. Key Employees) from another party (for a certain period of time). | N2 |
| non-systematic risk | Risk attributable to an individual company, pertaining to factors not associated with the sector or broader market. The impact of non-systematic risk factors can be reduced by the diversification of a portfolio. | N6 |
| NOPAT | Normalized Operating Profit After Tax. The ‘normalisation’ refers to the results of due diligence work, where exceptional items influencing profit are taken into account. | N3 |
| NOPAT/Normalized Operating Profit After Tax | the normalized operating profit after taxes. This is the operating profit after taxes, which is normalized by eliminating all extraordinary and non-recurring items | N4 |
| normal distribution | The most common type of distribution for a variable whereby the probability distribution plots all of its values in a symmetrical fashion and most of the results are situated around the probability’s mean. Often associated with the term bell curve, this terminology is an extension of the fact that the graph used to depict a normal distribution consists of a bell-shaped line. | N6 |
| normal yield curve | Described as being normal when the yields on short-term debt are lower than the yields on long-term debt. Also known as a positive yield curve. | N6 |
| Normalized Earnings | Economic Income adjusted for extraordinary, nonrecurring, noneconomic, or other unusual items in order to eliminate anomalies and facilitate comparisons | N7 |
| Normalized working capital | an analysis of how the working capital would look in normal circumstances. Adjustments could be for all exceptional and non-recurring items | N5 |
| Normalized Working Capital | an analysis of how the working capital would look in normal circumstances. This involves adjusting for all exceptional and non-recurring items, such as the collapse of a major customer, a major supplier position due to the purchase of a machine, or a large inventory position due to a machine breakdown | N4 |
| Normalized working capital | The ‘normalisation’ refers to the results of due diligence work, where exceptional items influencing working capital are taken into account. | N3 |
| Normalized Working Capital | estimated average Working Capital required for the day to day running of a company. Normalized Working Capital is usually calculated by reference to a company’s Stock, cash, debtors and creditors figures over the past year and will affect the overall value placed on the business. | N1 |
| Normalizing Adjustments | adjustments to a business’ financial statements for Nonoperating Assets and liabilities, and/or for extraordinary, nonrecurring, noneconomic, or other unusual items in order to eliminate anomalies and facilitate comparisons | N7 |
| North American Free Trade Agreement (NAFTA) | Agreement promoting free trade between the United States, Canada, and Mexico. | N6 |
| No-shop Clause | 1. Agreement between buyer and seller which prohibits the seller from subsequently soliciting offers from other potential buyers. A no-shop clause generally applies for a finite period only. 2. Provision in the context of a Fiduciary Out, stipulating that the management board may not actively solicit other offers which are more favourable for the shareholders. Less restrictive than a No-talk Clause. | N2 |
| No-talk Clause | 1. Contractual provision regarding a duty to maintain secrecy (see also Non-disclosure Agreement (NDA) and Confidentiality Agreement). 2. Provision in the context of a Fiduciary Out which prohibits the management board from talking to other parties about submitting offers. More restrictive than a No-shop Clause. | N2 |
| Notarisation | see Notarization | N1 |
| Notarization | the act of a notary public confirming either that it has witnessed a person signing a document or that the person which it witnessed signing a document was duly authorized to sign the same on behalf of a specific entity; in certain jurisdictions, this formality is required for certain types of documents to be valid and can require signatories to initial every page of a document and possibly even have to read out the document: beware of this before agreeing to attend a Closing meeting as you could be there for some time. | N1 |
| note | Short-term debt instrument, usually with a maturity of five years or less. | N6 |
| Note | another name for a Bond with a maturity of 10 years or less | N1 |
| Notifiable Transaction | a transaction which meets certain specified size tests under the Hong Kong Stock Exchange Listing Rules and thus, triggers public disclosure and possibly shareholder approval requirements for the relevant Listed Company. There are six types of Notifiable Transactions: Share transactions, discloseable transactions, major transactions, very substantial disposals, very substantial acquisitions and Reverse Takeovers. | N1 |
| notional amount | Notional amount for a derivative contract is the quantity/value of the underlying securities to which the contract applies. | N6 |
| novation | Substitution of a new entity for one of the parties to an agreement (e.g. a swap agreement), with the consent of each of the parties involved. | N6 |
| Novation | the name given to the process by which obligations as well as rights are transferred by one party to another or (in some civil law jurisdictions) the name given to the process by which an existing obligation is morphed into a different obligation. Contrast (in the former case) with Assignment. Novations can cause the loss of Security granted in certain European countries (if you do not phrase your Novation carefully enough) hence the use of Assignment and Assumptions in these instances. | N1 |
| NPV | See net present value. | N6 |
| NTM | acronym for next twelve months. Compare LTM. | N1 |
| NYSE | See New York Stock Exchange. | N6 |
Reference
N1: referring to The Book of Jargon – Global Mergers & Acquisitions, first edition, the Latham & Watkins, available at https://www.lw.com/admin/Upload/Documents/BoJ_Global_MandA-locked-March-2015.pdf.
N2: referring to Glossary of Key M&A and Corporate Terms, 4th edition, Dr Anne Meckbach and Dr Tobias Grau, available at https://cms.law/en/deu/publication/glossary-of-key-m-a-and-corporate-terms-2020.
N3：referring to M&A Dictionary, Global PMI Partners, available at https://gpmip.com/dictionary/.
N4：referring to M&A jargon demystified, KPMG, available at https://issuu.com/kpmg_be/docs/kpmg_m_a_vakjargon_en_digital.
N5: referring to Simple Guide to M&A Terminology and Jargon, Lucas & Weston Ltd., available at https://uploads-ssl.webflow.com/5708da760dd2dc033a78bd13/5b7ea45f3dbc72645fbee4b2_L%26W%20-%20M%26A%20Glossary.pdf.
N6：referring to INVESTMENT DICTIONARY, MARSH & McLENNAN COMPANIES, available at https://www.mercer.com/content/dam/mercer/attachments/europe/Netherlands/ic-dictionary-mercer.pdf.
N7: referring to International Valuation Glossary—Business Valuation, November 2021, jointly published by ASA, CBV Institute, RICS and TAQEEM, available at https://www.appraisers.org/docs/default-source/default-document-library/international-business-valuation-glossary_en_final.pdf?sfvrsn=e37c69d4_2.
The above information is collected from the Internet and reorganized for the purposes of learning and sharing only and not for any other purposes. It can not be guaranteed to be error-free.