|R|
| M&A Term | Definition | Note |
| rack rent | Rent that would be received on a property if it were leased on the open market. The current rent may be greater or less than the rack rent depending on the terms of the lease and how the market has moved since the last rent review. | N6 |
| Raider | another name for a Hostile Bidder. Also used as a pejorative term for an Activist Investor. | N1 |
| rally | Considerable and sustained increase in the price of a security or value of a market. | N6 |
| random walk theory | Theory that the price of an asset follows a random path and therefore past price movements cannot be used to predict future price movements. | N6 |
| Ras Laffan | a term used to describe the Ras Laffan Industrial City which is the main site for the production of LNG in Qatar | N1 |
| Ratchet | also known as “equity ratchet” or “performance ratchet,” a Ratchet is used to incentivize managers by increasing or decreasing the amount of equity they hold in a company depending on their performance and the performance of the company | N1 |
| Ratchets | ratchets are systems that are used to determine and change the ratios of the shareholdings between different groups of shareholders. A ratchet can make it possible, for example, for management to increase its share in the equity of a company if the company performs well. On the other hand, ratchets can be used to ensure that the investment fund achieves a maximum return if the company does not perform well | N4 |
| Rate of Return | an amount, expressed as a percentage of the amount of the investment, of anticipated or realized Economic Income and/or change in value of an investment | N7 |
| Rating | an assessment of the creditworthiness of a company by a rating agency such as Moody’s, S&P or Fitch | N4 |
| rating (credit) | See credit rating. | N6 |
| Ratner | a slang UK term to describe a member of company Management publicly destroying shareholder value by criticizing the company. In 1991 Gerald Ratner famously did this for the low-end jewelry shop which bore his family name. | N1 |
| real asset | Asset whose value is linked (directly or indirectly) to inflation. Equities, property, forestry, venture capital and inflationlinked bonds are often considered to be real assets. (See also fixed interest asset.) | N6 |
| Real Cash Flows | Cash Flows that exclude the effect of inflation over time. Contrast with Nominal Cash Flows. | N7 |
| real estate | Property in land, building or housing, as distinct from personal property (e.g. cars); also known as physical property, to distinguish itself from property trusts. | N6 |
| real interest rate | Interest rate adjusted for inflation. If the nominal interest rate is 6% and inflation is expected to be 2% then the real interest rate is 4%. The definitions of real yield, real rate of return, etc., are similar. | N6 |
| Real Rate of Return | a Rate of Return that does not include the effect of inflation. Contrast with Nominal Rate of Return | N7 |
| real return | Inflation-adjusted return. | N6 |
| Realization | the process of converting non-monetary assets, investments or services into cash or receivables through a disposal | N1 |
| rebalancing | Making adjustments to a portfolio to counteract the fact that different assets have performed differently over a period, and thus comprise different percentages of the portfolio than originally intended. | N6 |
| REBITDA/Recurring Earnings Before Interest, Tax, Depreciation and Amortization | the recurring profit before interest, taxes, depreciation and amortization. This is a gauge of the recurring operating cash flow of a company, and is the EBITDA adjusted for non-recurring items. Typical adjustments relate to the effect of a restructuring or a large one-off order or contract | N4 |
| Recap | shorthand for Recapitalization | N1 |
| Recap Accounting | accounting treatment under US GAAP for a Recap or Leveraged Recapitalization | N1 |
| Recapitalization | an adjustment or reshuffling of a corporation’s Capital Structure which may be treated as a Tax-Free Reorg under Section 368(a) (1)(E) where shareholders exchange old Stock for new Stock or where holders exchange certain Securities (generally, debt having a term longer than five years) for like Securities or for Stock. However, such exchanges may be taxable to the extent excess principal amount of debt is issued or Stock is issued for unpaid interest, certain unpaid dividends, or stock with a redemption premium. Sometimes called a Recap. | N1 |
| Receivership | a situation in which a receiver is appointed, either privately or by the court or a public body, to take control of the assets of a company which is unable to meet its liabilities. A receiver is usually given decision-making powers with respect to the assets in Receivership and has ultimate responsibility to recoup as much value as possible to satisfy the outstanding liabilities. See also Administrator. | N1 |
| recession | Two or more consecutive quarters of negative GDP growth in an economy. | N6 |
| Recitals | Statement of the background to a contract or agreement. Recitals include disclosures about existing contractual relationships and details of the parties. | N2 |
| Recitals | a name for the words at the beginning of many Acquisition Agreements that explain who the parties are and the basic terms of the transaction | N1 |
| Reconstruction | In this, a company transfers its undertaking and its assets to a new company in consideration of the issue of the new company’s shares to the first company’s members. And if the first company members debentures are not paid off, the new company should give the debentures to the respective holders and thus the first company would lose its identity. | N3 |
| Record Date | the date established by the Issuer of a Security for the purpose of determining the holders who are entitled to receive a dividend or Distribution or to vote at a Security holders’ meeting | N1 |
| Record Owner | the person who holds the Securities on the records of the corporation/company 1. (US) in US Public Companies, the Record Owner is almost always DTC. As a matter of state corporation law, only Record Owners have the right to vote Shares. However, because the DTC is a custodian, it passes all voting rights through to the DTC participants that have Stock certificates on deposit at DTC. Those members are typically brokers, dealers and bank custodians, all of whom also pass the vote through to the parties who placed the Shares in the custody of these intermediaries. Eventually, if all goes according to theory, the custodian at the end of the custody chain passes the voting rights onto the ultimate Beneficial Owner. 2. (FRA) under French Law, the registration of Shares in a shareholder’s account is the proof of ownership of such Shares |
N1 |
| Red Flag Due Diligence | In red flag due diligence, only aspects that are crucial to the transaction are examined. The resulting Red Flag Report summarises the findings, with some sections possibly just comprising bullet points. It typically focuses on the main risks and may even be restricted to Deal Breakers. | N2 |
| Red Flag Report | Red Flag Due Diligence | N2 |
| Red Flag Report | a Due Diligence report limited to substantial issues/risks and findings identified in the course of the Due Diligence; additionally, the scope of the Due Diligence is rather limited | N1 |
| Redact | to blank out sensitive information in a document, either by hand or electronically. Certain confidential or commercially sensitive information is usually redacted from documents before they are disclosed to third parties. | N1 |
| redemption | Repayment of an investor’s principal in a security, such as a bond, at or prior to maturity. | N6 |
| redemption date | See maturity date. | N6 |
| redemption yield | Calculation of the return that an investor will earn on a bond if he or she holds it to redemption, taking into account income and any capital gain or loss that will be made at the maturity date. | N6 |
| Reduction of Capital | the decrease by a company of its Issued Share Capital by special shareholder resolution supported by a directors’ solvency statement in the case of Private Companies limited by Shares, or by special shareholder resolution in the case of both Private Companies and Public Companies limited by Shares. Once the relevant resolution is passed, the company must obtain a court order that confirms the reduction. The court may impose additional terms and conditions on the reduction. A company may wish to reduce its Share Capital to free-up Distributable Reserves. 1. (FRA) the decrease by a company of its Issued Share Capital by special shareholder resolution. The decrease may be realized by way of: (i) purchase by the company of its own Shares followed by their cancellation; (ii) decrease of the Par Value of the Shares; or (iii) attribution of corporate assets in exchange for the cancellation of certain Shares. Also called capital redemption. 2. (HKG) a similar concept exists in Hong Kong |
N1 |
| Reference Deed | Notarial deed prepared by the notary prior to the actual appointment for notarisation. Reference is made to it in the (main) deed. This reduces the time required by the parties for notarisation. Otherwise the parties would need to be present to hear the content of the reference deed read out during the actual appointment. | N2 |
| Refinancing | repayment of existing debt with the proceeds of a new debt issuance. Any Refinancing will require a careful review of existing Indentures and Credit Agreements to make sure the debt being Refinanced can, in fact, be repaid and to verify that any debt left in place permits the incurrence of the new debt. Indenture and Credit Agreement debt Baskets will generally allow the Refinancing of existing debt, but subject to certain conditions that must be read carefully. See Latham & Watkins Client Alert No. 696, Restructuring High Yield Bonds: Getting Ready for the Next Phase of the Cycle (April 21, 2008), available at www.lw.com. | N1 |
| Reg Rights | shorthand for Registration Rights | N1 |
| Registered Shareholder | see Record Owner | N1 |
| registrar | Organisation appointed to record the issue and ownership of company securities. | N6 |
| Registration Rights | a Security holder’s rights to force an Issuer to register the holder’s Securities for sale under the relevant Securities laws (e.g., in the US, the 1933 Act). These rights enhance the Liquidity of the holder’s Securities because registered Securities are freely tradable. Registration Rights can take several forms. Holders of equity Securities obtained in a Private Placement often have rights to demand that the Issuer register their Securities or piggyback onto an offering in which the Issuer is already engaging. See Demand Registration Rights and Piggy Back Registration Rights. In private offerings of High Yield Bond and Convertible debt Securities, Issuers customarily provide Buyers with Registration Rights to enhance the post-Closing Liquidity of the Securities sold in the offering and, in the case of Private Company Issuers, agree to become Reporting Companies under the relevant laws (e.g., in the US, the 1934 Act). See also Reg Rights. 1. (US) the February 2007 changes to Rule 144 have had a significant effect on how Registration Rights are granted in connection with private offerings. See Latham & Watkins Client Alert No. 669, The Future of Registration Rights in Private Offerings of Debt Securities (January 22, 2008), available at www.lw.com. |
N1 |
| Registration Statement | the document filed with the SEC to comply with the 1933 Act in connection with a public offering of Securities. The Registration Statement contains the Prospectus. | N1 |
| Registro delle Imprese | Italian company register, holding the public files for Italian-incorporated entities. An office of the register is based in, and competent for, each Italian province | N1 |
| Regulated Market | an exchange recognized as such by the relevant authorities. A Regulated Market has an exchange license, operates on a regular basis, and established disclosure requirements subject to the provisions of the Prospectus Directive. Other markets, such as AIM, are often “Recognised Investment Exchanges” when they are not prescribed Regulated Markets. | N1 |
| Regulation 14A | the name for the compendium of SEC rules dealing with Proxy Statements and Proxy solicitations | N1 |
| Regulation M-A | the SEC regulation which sets forth disclosure requirements for Acquisition Transactions. Many of the disclosure requirements in Regulation M-A incorporate by reference provisions in Regulation S-K. | N1 |
| Regulation no. 11971 of 1999 | Consob’s Regulation No. 11971 issued on May 14, 1999 (Issuers’ Regulation) | N1 |
| Regulation S-K | the heart of the SEC’s integrated disclosure system, which provides the standard instructions for filing SEC forms. The SEC’s registration forms (such as Form S-1) and Periodic Report forms (such as Form 10-K) have cross-references to Regulation S-K. Regulation S-K then provides an outline of all the detail necessary for these forms. | N1 |
| Regulation S-X | the SEC’s accounting rules for the form and content of Financial Statements. All Financial Statements included in SEC filings must comply with Regulation S-X. Rule 144A Financings are not technically required to comply with Regulation S-X, however, as a matter of industry custom many do or nearly do comply. | N1 |
| Regulations | a legally binding legislative act of the EU which is directly enforceable in Member States without the need for enacting Member State legislation | N1 |
| rehypothecation | Means by which a prime broker gains access to bank loans. The prime broker’s clients (predominantly hedge funds) are required to post collateral with the prime broker for services such as securities lending or leveraged investment transactions. Rehypothecation occurs when the prime broker subsequently reuses the collateral that was originally posted by its client(s) to obtain a loan itself from a bank. | N6 |
| Reincorporation | means moving a company’s state of incorporation to another jurisdiction. Reincorporation is different from a redomiciliation, the latter relates solely to a company’s tax residency. | N1 |
| reinvestment | Using the dividends, interest or profits from an investment to buy more of that investment. | N6 |
| REIT | acronym for real estate investment trust | N1 |
| REIT (real estate investment trust) | Particular type of pooled fund that invests in the property sector | N6 |
| Related Corporation | defined in Sections 4(1) and 6 of the Companies Act of Singapore as follows: where a corporation: (i) is the Holding Company of another corporation; (ii) is a subsidiary of another corporation; or (iii) is a subsidiary of the Holding Company of another corporation, that firstmentioned corporation and that other corporation shall be deemed to be related to each other. See also Affiliate. | N1 |
| Related Party Agreement | see Related Party Transaction | N1 |
| Related Party Transaction | can be those transactions between a Listed Company (or its subsidiaries or associated companies) and certain “interested persons” or “Related Parties” as defined under the relevant Listing Manuals (i.e., directors, chief executive officers or Controlling Shareholders, or their respective associates). Such transactions are usually subject to announcement and shareholder approval requirements and, depending on the form of the company, a prior approval may also be required from the Board. Such provisions can also apply to non-Listed Companies. 1. (HKG) the term more commonly used under the Listing Rules of the Hong Kong Stock Exchange is “Connected Transaction” whereas the term Related Party Transaction is more often used in the Financial Statements |
N1 |
| relative return | Asset’s or portfolio’s return over a period of time relative to that of a chosen benchmark. Calculated as the difference between the asset’s absolute return and the benchmark’s performance. | N6 |
| Release Letter | a certificate from the advisor of the company/Seller/Buyer provided to the Financing Sources according to which the respective Due Diligence report (or any other experts’ opinion) may be released to the Financing Sources. A Release Letter typically states the financing banks may not rely on the content of the disclosed documents. According to the Release Letter, the liability of the originator is usually excluded (or at least limited). | N1 |
| Release/reliance (for financiers) | due diligence reports prepared by advisors are used by the acquiror and also by parties involved in financing the acquisition. It is usual, for example, for financing banks to have access to the reports following the exchange of a letter in which the responsibilities are defined. Broadly speaking, there are two types of access: simple release, in which the advisors do not have any specific accountability to the banks, and reliance, in which the advisors have a similar duty of care (accountability) to the banks as they do to the buyer. | N4 |
| Release/reliance restricted | This is applicable to due diligence reports prepared by an advisor. The report has a very limited number of recipiants, usually only the management of the potential acquirer. Other advisors of the acquirer however, or banks, have an interest in consulting the due diligence reports. Reports may be shared with such a recipients in two ways: – condition “”reliance restriced””: the recipient is held to the same duty of care as the original signatory of the report – condition of “”release””: the original signatory does not have any accountability at at vis-à-vis the recipient. | N3 |
| Reliance Letter | Written statement by the author of a Due Diligence Report to a third party (to whom the client wishes to forward the report, for example) accepting liability to the third party for the content of the report. Since the liability involved can be considerable, the issuing of a reliance letter is the exception rather than the rule. | N2 |
| Reliance Letter | a letter which establishes that the named recipient may rely on certain provisions of an auditor’s opinion, independent expert opinion or Legal Opinion, or an expert’s Due Diligence report, as if the original opinion/report were addressed and delivered to the named recipient. Reliance Letters with respect to Due Diligence reports are typically given to original Lenders and those becoming Lenders in initial Syndication | N1 |
| Relief from Royalty Method | a method that estimates the value of an Intangible Asset by reference to the present value of the hypothetical royalty payments that are avoided by owning the asset as compared with licensing it from a third party. Also known as royalty savings method. See also Royalty | N7 |
| Remedies | 1. Legal recourse, also claims for compensation (in which case the term “remedies for damages” is often used). 2. Remedial measures in the context of Merger Control, intended to secure approval for the merger, such as the sale of a business unit. | N2 |
| rental value growth | Growth in the rent of a property that could be charged if the unit was let in the open market on the valuation date. | N6 |
| Reorganisation | Refers to the transfer of Shares in a company within a corporate group, such that the company then has a new parent. Can also refer to the transfer of Assets within a corporate group. | N2 |
| Reorganization | a generic term referring to some fundamental change in a company’s Capital Structure and/or in its financial and legal obligations as a result of an M&A transaction 1. (US) Reorganization is also a term of art under the tax laws and under the Bankruptcy Code. See also Chapter 11 and Tax-Free Reorg. |
N1 |
| Rep & Warranty Insurance | insurance which provides cover from losses arising from a breach of Representation and Warranty or Indemnity. Such a policy is available to either Sellers or Buyers and, if structured properly, having the insurance policy can result in: (i) the Seller having immediate access to the sale proceeds, a reduced period of risk and, in many cases, no requirement to leave funds in Escrow; or (ii) the Buyer having a satisfactory level of recourse (which may have otherwise been unavailable) through an insurance policy with financially-rated insurers. Sometimes referred to as R&W Insurance or W&I Insurance. | N1 |
| Replacement Cost Method | a method under the Cost Approach that estimates the value of an asset by calculating the cost, as of the Valuation Date, to recreate the functionality or utility of a similar asset. See also Cost Approach, and Replacement Cost New | N7 |
| Replacement Cost New | the cost, as of the Valuation Date, of an identical new asset or a new asset having the equivalent utility to the subject asset. Also known as reproduction cost new | N7 |
| replacement ratio (defined contribution) | Amount of income (actual or projected) that can be secured by an individual’s accumulated retirement savings at retirement, expressed as a proportion of his or her income before retirement. | N6 |
| REPO | See repurchase agreement. | N6 |
| Report Date | the date of issuance of a Valuation report. Contrast with Valuation Date | N7 |
| Report on Title | like a Certificate of Title but more detailed (and therefore more expensive) | N1 |
| Reportable Event | an event which must be reported publicly pursuant to the relevant Disclosure Rules. Because of the almost universal desire for confidentiality surrounding M&A overtures and negotiations before an Acquisition Agreement or other transaction agreement is signed, a great deal of planning and care is usually devoted to avoiding prematurely engaging in a Reportable Event that would Trigger a filing and disclosure obligation. 1. (US) see also Periodic Reports 2. (UK) this may include events which a Listed Company is required to inform shareholders of in accordance with FSA rules, including the Listing Rules 3. (ESP) such information or event must be disclosed pursuant to the Spanish Securities Act 4. (FRA) such information or event must be disclosed pursuant to the AMF’s General Regulation 5. (SGP) an event which must be reported publicly pursuant to Rule 7 of the Listing Manual, which generally provides for the disclosure of material and other information. Other Specific Disclosures prescribed in the Listing Manual include “Discloseable Transactions” (under Rules 1010 to 1013), “Major Transactions” (under Rule 1014) and “Very Substantial Acquisitions or Reverse Takeovers” (under Rules 1015 to 1017). 6. (UAE) refer to Articles 33-35 of the SCA’s Decision No. 3 |
N1 |
| Reporting Company | a company that files Periodic Reports with the SEC. Public Company is often used synonymously with Reporting Company. | N1 |
| Representation | see Representations and Warranties | N1 |
| Representations | If statements made by the seller about the company prove to be incorrect, these statements form the basis for any subsequent indemnities. | N5 |
| Representations | statements. In the event that statements made by the seller about the company prove to be incorrect, these statements, either together with the warranties or otherwise, form the basis for subsequent indemnities | N4 |
| Representations | A statement made by the seller about the target, similar to a ‘management representation’ in an audit report. The seller is held liable for the veracity ot the statement. Claims against the seller can arise if the statements are incorrect. See also ‘reps & warranties | N3 |
| Representations & Warranties | Warranties. | N2 |
| Representations and Warranties | an assertion of fact in a contract (such as an Acquisition Agreement, Merger Agreement, Credit Agreement or Underwriting Agreement). Representations and Warranties are the means by which one party to a contract tells the other party that something is true as of a particular date. Representations and Warranties can also be used to allocate a risk of unknown facts and/or future events if appropriately drafted to do so. | N1 |
| Reps & Warranties | Representations & Warranties. | N2 |
| repurchase agreement (REPO) | Agreement to sell securities, usually bonds, to another party and to buy them back at a specified date and price. | N6 |
| Request for Information (RFI) | Request to bidders or advisors to submit offers relating to a possible corporate acquisition or opportunity to work on a matter (see Pitch). | N2 |
| Request for Proposal (RFP) | Request for Information (RFI). | N2 |
| Required Rate of Return | the minimum Rate of Return acceptable by investors before they will commit money to an investment, given its level of risk | N7 |
| Rescue (finance) | to offer financial support to a company in debt in order to bring that company out of Insolvency or prevent it from becoming insolvent | N1 |
| responsible investment | Integration of environmental, social and corporate governance (ESG) considerations into investment management processes and ownership practices in the belief that those factors can have an impact on financial performance. | N6 |
| responsible investment policy statement | General (usually public) statement on responsible investment adopted by boards of trustees or directors that directs investment staff practices and decisions. This can be included within a broader investment policy statement and/or developed as a standalone responsible investment policy statement. | N6 |
| Restricted Stock | Stock not registered for sale under the 1933 Act. As a result, the manner in which the Stock may lawfully be sold is restricted to Private Placements and other non-regulated transactions. With respect to equity compensation, Restricted Stock refers to Stock granted or purchased by an executive or director who is subject to Vesting and forfeiture, usually based on continued service. | N1 |
| Restricted Stock Unit | an equity award issued by a company that represents an unsecured promise by the company to grant a specified number of Shares of Stock to a holder in the future, usually upon Vesting and lapse of forfeiture provisions. RSUs can be settled in cash or Stock. | N1 |
| Restrictions on Share Transferability | In some cases, there are restrictions on the transferability of shares in a company. Transferability can be made dependent on the approval of the company or the co-shareholders, for example. | N2 |
| Restrictive Covenant | Agreement between the parties to refrain from certain actions. | N2 |
| Restrictive Covenant | a kind of Negative Covenant, often a restriction placed on a Seller of a company or its current or former employee, usually in the form of a Non-Solicitation or Non-Compete Clause | N1 |
| Restructuring | Restructuring of a company or corporate group. | N2 |
| Restructuring | bringing about fairly major changes in the organization of a company by changing the Management and/or the Share ownership structure | N1 |
| Results | a company’s financial earnings and profitability, which may be shown in the company’s Profit and Loss Statement | N1 |
| retail fund | Assets managed on behalf of the direct public in the form of a pooled fund. | N6 |
| Retail Prices Index (RPI) | Measure of price inflation in the UK. It measures the average change from month to month in the prices of goods and services purchased by most households in the United Kingdom. Used for uprating state pensions and benefits and calculating payments due on index-linked gilts. (See also Consumer Prices Index.) | N6 |
| retained earnings | Company earnings that are not paid out as dividends. | N6 |
| Retained Liabilities | a Seller’s liabilities that are not transferred to or assumed by a Buyer of some or all of such Seller’s assets | N1 |
| Retainer | 1. Letter of Engagement. 2. Advance payment. | N2 |
| Retainer fee | the fixed or monthly payment that is awarded regardless of whether the transaction is completed. | N5 |
| Retainer fee | the fixed or monthly payment that is awarded regardless of whether the transaction is completed | N4 |
| Retainer fee | In some instances, a service is paid partially based on how successful it is, and partially via a fixed amount. The fixed amount can be an hourly, daily or monthly rate and is called the ‘retainer’ | N3 |
| Retention Bonus | a bonus paid to an employee to encourage the employee to remain in the employ of the company, often during a specified period. See Golden Handcuffs. | N1 |
| return | Increase in value of an investment over a period of time, expressed as a percentage of the value of the investment at the start of the period. (See also money-weighted rate of return, time-weighted rate of return.) | N6 |
| return on equity (ROE) | Company earnings divided by shareholders’ funds. Provides an indication to shareholders of how effectively their money is being used by the company. | N6 |
| Return on Investment | a calculation used to evaluate the efficiency of an investment. ROI is the amount of proceeds received from the sale of an investment less the cost of the investment, divided by the cost of the investment. | N1 |
| Return on Investment (Rol) | Total return on capital; return on all capital employed (equity and debt). | N2 |
| return seeking assets (RSA) | A generic term which refers to the proportion of a scheme’s assets invested in securities whose value is expected to increase over time, at a faster rate, compared to its liabilities. | N6 |
| Reverse Break-up Fee | The reverse equivalent of a Break-up Fee. If, for example, a break-up fee is agreed such that it is payable by the seller if the negotiations fail due to actions for which the seller is responsible, the reverse break-up fee involves a payment by the buyer if failure of the negotiations is attributable to the buyer. | N2 |
| Reverse Break-Up Fee | another name for a Reverse Termination Fee | N1 |
| Reverse Merger | another name for a Reverse Subsidiary Merger | N1 |
| Reverse Morris Trust | a transaction in which a Parent corporation spins off its corporate subsidiary and the subsidiary is immediately merged into an acquiring corporation. Such transaction may be tax-free if the Parent’s shareholders own more than 50 percent of the corporation that survives the Merger. See Spin-Off. | N1 |
| Reverse Sub Merger | another name for a Reverse Subsidiary Merger | N1 |
| Reverse Subsidiary Merger | a Triangular Merger in which a subsidiary of the Buyer (usually a wholly-owned subsidiary created for this purpose) is merged with and into the Target Company, and the Target Company is the surviving company in the Merger. A Reverse Subsidiary Merger is the preferred form of Triangular Merger because it avoids issues concerning the assignability of Target Company contracts and similar rights to the Buyer or one of the Buyer’s subsidiaries. Also referred to as a Reverse Merger, Reverse Sub Merger, and Reverse Triangular Merger. | N1 |
| Reverse Takeover | when a small company acquires a larger competitor, or when the company being taken over is likely to be the major element in the combined business. See RTO. 1. (HKG) also a specific type of transaction defined in, and regulated by, the Hong Kong Stock Exchange Listing Rules |
N1 |
| Reverse Termination Fee | amount payable to a Target Company by a Buyer for all or certain specified breaches under an Acquisition Agreement. Reverse Termination Fees, like liquidated damage provisions, usually constitute the exclusive liability of the Buyer for the specified breaches. Reverse Termination Fees are usually characterized as payment of a fee or an amount, not as Liquidated Damages, although the fees have the same effect. When a Reverse Termination Fee is the exclusive remedy for all Buyer breaches, the Reverse Termination Fee can essentially, in some cases, provide the Buyer an Option to back out of a transaction at a certain cost. Often utilized when financing or antitrust approvals are conditions to Closing, thereby shifting cost of failure to the Buyer. | N1 |
| Reverse Triangular Merger | another name for a Reverse Subsidiary Merger | N1 |
| reversionary yield (real estate) | Estimated market rental value divided by the property value (market value of rent may differ from actual rental currently being earned). | N6 |
| Reviewable Transaction | a transaction a company entered into, before the start of Insolvency, that an Administrator or a Liquidator may challenge under the Insolvency Act. The equivalent concept exists in Hong Kong. | N1 |
| Reviewing Strategic Options | widely understood as code for a planning process that includes the sale of all or a substantial part of a company’s business | N1 |
| Revlon | a reference to one of the most important Delaware cases involving the Fiduciary Duty of a Target Company’s Board of Directors when it is considering the sale of the company for primarily cash consideration. See also Revlon Doctrine. | N1 |
| Revlon Doctrine | a term derived from the famous case Revlon v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986), which is used to describe both a standard of judicial review (or, as it is sometimes called, a level of judicial scrutiny, as in Enhanced Scrutiny) and a required determination by the Board of Directors of the Target Company. In its first usage, the Revlon Doctrine means that, rather than according a Target Company’s Board of Directors the substantive and procedural benefits of the Business Judgment Rule, a court will require a showing by the Target Company that the Board of Directors’ determination was reasonable, not merely rational. This level of review is sometimes called Enhanced Scrutiny, in contrast to the favorable presumptions supporting Board of Directors conduct that make up the Business Judgment Rule. In its second usage, the Revlon Doctrine means that to discharge its Fiduciary Duties of care and loyalty, a Target Company Board of Directors has the duty of selling the company at the highest price reasonably available under the circumstances. | N1 |
| Revolver | a senior secured Credit Facility structured as a line of credit that can be borrowed, repaid and reborrowed at any time prior to maturity, at the Borrower’s discretion. A Revolver or Revolving Facility can also often be used for the issuance of letters of credit. | N1 |
| Revolving Facility | see Revolver | N1 |
| RF / Risk Free Rate | In modern portfolio theory, an “appropriate” price is based on relative risk combined with the return on risk-free assets. The return on a risk-free asset is the RF, or risk free rate. An example of a risk free asset is a AAA government bond | N3 |
| RF/Risk Free Rate | the return on a risk-free investment. A long-term investment in government bonds is often used as a reference for this | N4 |
| RFI | Request for Information. | N2 |
| RFP | Request for Proposal. | N2 |
| Right of First Negotiation | when a party that owns an item of property or a right agrees with a counterparty that it will not dispose of the property or right without first giving the counterparty an opportunity to negotiate an agreement to acquire the property or right. Right of First Negotiation is generally the weakest form of counterparty right and is distinguished from, in order of increasing strength, a Right of First Offer and Right of First Refusal. | N1 |
| Right of First Offer | when a party that owns an item of property or a right agrees with a counterparty that it will not sell the property or right without first giving the counterparty an opportunity to submit the first offer to purchase the property or right. Right of First Offer is generally a moderate form of counterparty right and is distinguished from the weaker Right of First Negotiation and the stronger Right of First Refusal. | N1 |
| Right of First Refusal | The grantor of a right of first refusal must offer to sell his shares to the other party before selling them to a third party. The beneficiary of the right then has the option of concluding the agreement with the seller on the same terms as those negotiated with the third party. Rights of first refusal are often agreed in cases where the original shareholders wish to avoid being confronted with external shareholders. In the context of transactions, any rights of first refusal and associated requirement to offer shares to existing shareholders can lead to considerable delays due to the time periods involved. A Call Option works in a similar fashion. A right of first refusal differs from a Pre-emptive Right in that the grantee does not adhere to an existing contract with a third party; rather, the grantee enters into a separate contract (if exercised). | N2 |
| Right of First Refusal | when a party that owns an item of property or a right agrees with a counterparty that it will not sell the property or right to a third party without first giving the counterparty a right to match the third party’s Offer. If the counterparty meets the offering price, the first party will be obligated to sell the property or right to the counterparty. Right of First Refusal is generally the strongest form of counterparty right and is distinguished from, in order of increasing strength, a Right of First Negotiation and Right of First Offer. See also Matching Rights. | N1 |
| Rights | in an M&A context, Rights are frequently used as shorthand for the Instrument that is issued under a Shareholder Rights Plan or Poison Pill. More generally, Rights are another name for a Stock Option or Stock Warrant. | N1 |
| Rights Agent | a trust company which agrees to certain administrative duties in connection with a Poison Pill. The Rights Agent is the counterparty to the Rights Agreement which creates the Poison Pill. | N1 |
| Rights Agreement | an agreement between a company and a Rights Agent creating a Poison Pill | N1 |
| rights issue | Issue by a company of rights to sell new shares to existing shareholders in proportion to their holdings. For example, a one-for-two issue allows each shareholder to buy one new share for every two held. Rights issues are a means of raising additional funds to finance acquisitions, capital investment or reduce debt. | N6 |
| Rights Issue | a fundraising structure whereby existing shareholders are invited to purchase additional Shares in the Issuer at a reduced price in proportion to their existing holding | N1 |
| Rights Plan | shorthand for Shareholder Rights Plan, another (less pejorative) name for a Poison Pill | N1 |
| ring-fencing | Act of separating investors’ assets from those assets used to determine an investment bank’s net value. The ring-fenced assets are usually held in separate offshore accounts and are therefore protected from claims by creditors of the investment bank in the event of the bank’s failure. | N6 |
| risk | a. Likelihood of a return different from that expected and the possible extent of the difference. Downside risk is the likelihood of a loss, or a return less than expected on an investment. b. Also used to indicate the volatility of different assets. (See also cash flow risk, funding risk, investment risk, market risk, solvency risk.) | N6 |
| Risk Arbitrage | a very common form of Arbitrage in a M&A context. Risk Arbitrage consists of buying Shares of a Target Company on the assumption that the transaction will be completed. Given the risk that the transaction won’t be completed, the Stock of a Target almost always trades at a discount to the deal price. The Arbitrageur makes money by successfully betting that the discount is too steep and is vindicated when the deal does Close on schedule. The Arbitrageur loses money when the deal doesn’t Close or doesn’t Close on time, proving the discount was not steep enough. Some Risk Arbitrageurs do not have another business. Others are Event Driven Hedge Funds which use Risk Arbitrage as one of their investment approaches. | N1 |
| risk averse | Preference of an individual or entity for avoiding risk, however defined. In terms of returns a risk-averse investor would seek a less volatile return unless he or she were adequately compensated for the risk. | N6 |
| Risk Premium | a Rate of Return added to a base rate (e.g., a Risk-Free Rate) to reflect the incremental risk of an asset, business, or investment (e.g., Equity Risk Premium, Unsystematic Risk premium, country risk premium, or size premium) | N7 |
| risk premium | Additional return relative to the risk-free return expected from a risky asset to compensate for the additional risk. (See also equity risk premium.) | N6 |
| risk tolerance | Extent to which an investor is prepared to accept volatility or risk in a portfolio. | N6 |
| risk/return trade-off | Amount of expected return that must be sacrificed in order to reduce risk. | N6 |
| risk-adjusted return | Any measure of the return earned by an investment that is adjusted to take into account the level of risk taken to achieve it. | N6 |
| Risk-Free Rate | a Rate of Return available in the market on an investment perceived as free of default risk | N7 |
| risk-free rate of return | Yield on a riskless investment (generally one that has a government-backed guarantee and a known rate of return). For example, the yield on a governmentissued three-month security is often taken as a measure of the three-month risk-free return against which other riskier assets are measured. | N6 |
| Road Show | in the M&A context, Road Show means an organized series of in-person solicitations of institutional shareholders and Proxy Advisory Firms by Management; and in the financing context, Road Show means the same kind of process, but targeted at potential Buyers of the Securities being offered. A Road Show often requires extensive travel (hopefully first-class or private jet planes, limousines, fancy hotels and big steak dinners). In most cases Management and bankers go on the Road Show, not lawyers. | N1 |
| Roadshow | Series of presentations, e.g. made by management to banks and investors. | N2 |
| ROE | See return on equity. | N6 |
| ROFN | acronym for a Right of First Negotiation | N1 |
| ROFO | acronym for a Right of First Offer | N1 |
| ROFR | acronym for a Right of First Refusal | N1 |
| RoI | Return on Investment. | N2 |
| ROI | acronym for Return on Investment | N1 |
| rolling period returns | Annualised returns over a given period ending with the date stated. This allows investors to compare the returns achieved over a specified period of time leading up to various dates over the holding period of their investments. | N6 |
| rolling settlement | System for settling share transactions under which bargains are settled a number of days after being transacted. | N6 |
| Roll-over | 1. The seller invests part of the purchase price in an equity stake in the acquiring company (reinvestment). 2. Form of lending in which the interest is fixed in advance for a defined period (e.g. three months). At the end of this period the interest rate is adjusted in accordance with a reference rate. | N2 |
| Rollover Equity | the use of investment proceeds to which a person is entitled, e.g., cash on a sale of Shares, to reinvest in the same or a similar investment. In a Private Equity context, managers may “rollover” their equity in a Target Company with the effect, on a tax deferred basis, that instead of receiving cash for their Shares they receive new Shares in the Target Company. As a rolled over investment is not realized, Capital Gains Tax liability may be deferred. The Rollover Equity will usually have the same basis as that of the LBO Sponsor with the result that retained Management will be able to realize the same return on equity as the LBO Sponsor. | N1 |
| Roll-Up | a series of Acquisitions by one company of other companies in the same line of business. The resulting combined entity is also sometimes called a Roll-Up company or simply a Roll-Up. Sometimes also called a build-up. | N1 |
| Roll-up strategy | The strategy of buying companies in the same market, and merging them. Often applied by Private Equity funds | N3 |
| Royalty | a payment (hypothetical or actual) made for the use of an asset, especially an Intangible Asset or a natural resource. See also Relief from Royalty Method | N7 |
| RSU | acronym for Restricted Stock Unit | N1 |
| RTO | acronym for Reverse Takeover | N1 |
| Rule 10b-5 | the SEC rule prohibiting employment of fraudulent, manipulative and deceptive practices. Rule 10b-5 is one of the most important SEC rules, serving as the basis for the case law prohibiting trading on the basis of non-public material information — so-called Insider Trading. | N1 |
| Rule 10b-5 Representation | a term generally used as shorthand for a Representation and Warranty by an Issuer, Bidder, Target Company or Borrower that the Due Diligence information provided is complete and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading. This is “magic” language based on Rule 10b-5. | N1 |
| Rule 13e-3 | SEC rule under the Securities Exchange Act governing Going Private transactions. See also Going Private transaction and Schedule 13E-3. | N1 |
| Rule 14a-8 Proposal | a resolution proposed by a shareholder at a Shareholders’ Meeting which the shareholder intends to include in the company’s Proxy Statement and Proxy Card for the meeting, pursuant to SEC Proxy Rule 14a-8. Rule 14a-8 provides that such a proposal, if it meets certain eligibility standards, must be included in a company’s Proxy Materials at no cost to the shareholder. Rule 14a-8 provides a very low cost way for shareholders to force a shareholder vote on proposals for company actions. | N1 |
| Rule 14d-9 | the SEC rule implementing Section 14(d)(9) of the 1934 Act. Rule 14d-9 requires a Board of Directors of a Target Company, which is the subject of a Tender Offer or Exchange Offer, to make a recommendation to its shareholders with respect to tendering into the Offer and to provide certain related information. | N1 |
| Rule 20.1 letter | a letter to the UK Takeover Panel from a Financial Advisor chaperoning a Shareholders’ Meeting concerning a UK Takeover. Rule 20.1 of the City Code requires that all information about parties to an Offer must be made available to all shareholders and persons having information rights as nearly as possible at the same time and in the same manner. The Financial Advisor is required to confirm that no new material information has been passed to a shareholder which will not be otherwise made publicly available. | N1 |
| Rule 20.2 letter | a request made pursuant to the equality of information provisions of Rule 20.2 of the City Code from a Bona Fide potential Bidder to receive all information provided to another known Bidder | N1 |
| Rule 3 (adviser) | an independent adviser appointed pursuant to Rule 3 of the City Code, by the Board of an Offeree company to provide competent independent advice on an Offer | N1 |
| Rule 5 of the Singapore Takeover Code | prohibits Frustration by Offeree Board, whereby in the course of an Offer, or even before the date of the Offer, if the Board of the Target Company has reason to believe that a Bona Fide Offer is imminent, the Board must not, except pursuant to a contract entered into earlier, take any action, without the approval of shareholders at a general meeting, on the affairs of the Target that could effectively frustrate any Bona Fide Offer or deny shareholders an opportunity to decide on its merits. | N1 |
| Rule of 6 | concept under Rule 2 of the City Code prohibiting possible Offerors from speaking to more than six external parties — including providers of finance, but excluding professional advisers — without announcing their interest publicly. See Practice Statement 20 of the City Code for further information. | N1 |
| running yield | Annual income on an investment divided by its current market value, for example the dividend yield on equities. | N6 |
| Russian Roulette | A type of dispute resolution mechanism used in a Joint Venture; closely related to a Texas Shoot Out. A Russian roulette mechanism makes it possible to force termination of the joint venture, either by one party accepting an offer from the other party to acquire its shares or by the other party transferring its own shares on the same terms to the party seeking to end the venture. Several variants of Russian roulette are possible in practice. | N2 |
| Russian Roulette | a termination mechanism used for Joint Venture companies whereby shareholder A has the option to serve notice on shareholder B offering to transfer all of its Shares in the company to shareholder B at a price specified by A. B must either accept A’s Offer and buy A’s Shares at the stated price or must sell all its own Shares to A at the same price per Share. | 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.