|W|
| M&A Term | Definition | Note |
| Waterfall | the contractual allocations of Cash Flows, commonly resulting from a liquidity event (e.g., merger, acquisition, initial public offering), to the various ownership classes (e.g., debt, preferred equity, common equity) in a business, reflecting the economic rights of each class | N7 |
| Weighted Average Cost of Capital (WACC) | a measure of a business’ overall Cost of Capital in which the expected Rate of Return on each component of capital (e.g., debt, equity) is weighted at market value based upon its relative proportion of the Capital Structure | N7 |
| With and Without Method | a method used to estimate the value of an asset by comparing a scenario in which the business uses the asset and another scenario in which the business does not use the asset, all other factors held constant. Also known as premium profits method | N7 |
| Working Capital | the amount of current assets minus current liabilities held in a business for its day-to-day operational needs. Also known as debt-free net working capital when all or a portion of cash and the current portion of interest-bearing debt is excluded | N7 |
| warehousing | Practice by a bank of taking on inflation supply (e.g. from a private finance initiative [PFI] deal) and keeping this inflation on its books with the expectation of hedging it in the future by entering into an inflation swap with a pension fund. | N6 |
| warrant | Certificate, attached to a security, entitling holder to buy a specific amount of securities at a specific price. Warrants are valid for a specified period of time which may lapse either before or, in the case of warrants to purchase common stock, on or after the maturity of the debt security. Warrants are usually detachable and may be traded independently of the debt security. Effectively warrants are long-term call options. | N6 |
| weak form efficiency | One of the different degrees of the efficient market hypothesis (EMH), suggesting that current stock prices reflect and incorporate all relevant historic information. The weak form therefore implies that technical analysis based on such historic information cannot be used to predict future stock prices. | N6 |
| weighted average cost of capital (WACC) | Calculation of a firm’s overall cost of capital that weights each source of finance proportionately (i.e. equity and debt). | N6 |
| weighted average return | Rate of return that is weighted to take into account the relative sizes of the various assets or funds which make up the sample. | N6 |
| weighting | Proportion of an index or portfolio made up of an individual or group of items, usually expressed as a percentage — for example, the percentage of a portfolio invested in a region or any one stock. | N6 |
| white knight | Friendly potential bidder for a company usually sought out as an alternative to a hostile bidder. | N6 |
| widow and orphan stock | Safe stock considered suitable for highly risk-averse investors. | N6 |
| Wilshire 5000 Index | Total market index measuring the performance of all US-headquartered equity securities with readily available price data. It is the most comprehensive index for the US equity market. | N6 |
| wind-up | Process by which a company ceases to operate as a going concern, and its assets and property are liquidated in order to repay creditors. | N6 |
| withholding tax | Tax levied by overseas governments on dividends paid abroad. This may not be reclaimable, even by tax-exempt investors. | N6 |
| with-profits fund | Investment product usually issued by an insurance company, which pays bonuses to policyholders from the profits made on the underlying investments. Policyholders may receive bonuses regularly and/or on maturity. The underlying assets of the with-profits fund usually include equities, bonds and property. | N6 |
| WM company | One of the main service providers in the UK that independently analyses the performance of pension funds and their investment managers. | N6 |
| WM Performance Services | One of the main service providers in the UK that independently analyses the performance of pension funds and their investment managers. Part of the State Street group of companies. | N6 |
| World Trade Organisation | Supranational body established to encourage and supervise international trade between member nations. | N6 |
| writer | Organisation or individual who sells (or grants) an option. | N6 |
| write-down | Investment which has been valued significantly below its original cost, but which is likely to recover at least part of its cost. | N6 |
| write-off | Investment from which there is no likelihood of any recovery of the amount invested. | N6 |
| W-shaped recovery | Describes the change of an economic indicator, such as unemployment or GDP, during a recession when the indicator experiences a sharp decline, followed by a rally back to original levels, and then a fall in value followed by another sharp rise. | N6 |
| Warranties & Guarantees | The seller provides statements about the business and also guarantees that these statements are correct. The warranties are often limited by time and up to a certain amount of money. | N5 |
| Working capital | the sum of the customers, suppliers, stocks and other current assets and liabilities necessary for the day-to-day operations of the company. | N5 |
| Write-Down | a decrease in the reported value of an asset or a company. | N5 |
| Write-Off | a decrease in the reported value of an asset or a company to zero. | N5 |
| WACC/Weighted Average Cost of Capital | the weighted average cost of capital. The WACC is calculated by taking the weighted average of the cost of the capital and the cost of the debt (cost of equity and cost of debt). The weighting factor is the ratio of financing from the company’s own funds (capital) to financing from borrowed funds (loans – debt) | N4 |
| Warrant | a warrant gives the holder the right, but not the obligation, to subscribe to a capital increase at a predetermined price on or before a specific date. This is a commonly used alternative to options in employee ownership schemes, because the company does not need to possess any of its own shares since new shares will be created when the warrant is exercised. | N4 |
| Warranties | guarantees or general safeguards. The seller not only provides statements, but also guarantees that these statements are correct. The warranties may be time-limited and limited up to a certain amount of money | N4 |
| Working Capital | the sum of the customers, suppliers, inventories and other current assets and liabilities necessary for the day-to-day operation of the company. | N4 |
| Warranties | A guarantee provided by the Seller in favour of the Acquirer, and included in the Sale and Purchase Agreement. The guarantee is monetary, and backs up the seller’s statements. | N3 |
| Weighted Average Cost of Capital (WACC) | In the Discounted Cash Flow (DCF) method, the actualisation of future free cash flows in a forecast financial model is based an discount factor known as the WACC(Weighted Average Cost of Capital). The ultimate „benefit“ from an investment comes in the form of positive cash flow. The higher the expected cash flow a company can generate in the future, the higher its current value. The higher the WACC, the lower the current value of the Target. To calculate cash flow of a company we need information contained in a projected income statement as well as in the accompanying balance sheet, changes in expected working capital, future capital expenditure and sources of cash. These projections are subject to a host of assumptions related to each and every element in the balance sheet and profit and loss account: growth, margins, days sales outstanding, liabilities, financining sources, interest costs, … Risk: This implicates that estimating a cash flow is a risky business. The level of assesed risk will influence the investor’s demanded return. The higher the risk, the higher the demanded return. The higher the demanded return, the lowerthe amount the investor willing to pay up front for the company | N3 |
| White knight | A white knight is an alternative buyer who enters the fray when the target company is raided by a hostile suitor | N3 |
| Working capital | These are the current elements on the balance sheet: customers, suppliers, inventories and other current assets and liabilities. A positive working capital, means that the company’s activities claim cash: the higher the revenue, the more cash is parked on the balance sheet. Working capital can be a positive, or a negative number. Items making up the ‘plus’ elements are: – inventories – work in progress – accounts receivable – other short term assets – NOT: cash The ‘minus’ elements are: – short term loans – wages payable – social security payable – accounts payable – other short term payables. A negative working capital means that the company’s activities are financed by its short term debtors and suppliers. A positive working capital, is that the company is financing its creditors. | N3 |
| W&I Insurance | see Rep & Warranty Insurance | N1 |
| WACC | acronym for Weighted Average Cost of Capital or the weighted average Cost of Capital of the types represented on a company’s Balance Sheet | N1 |
| Walkaway Rights | right to terminate an agreement due to particular Trigger events arising or failing to materialize within a particular period. Commonly granted to a Buyer where there is an element of dealuncertainty, such as where there is a split signing and Completion. For example, when used to describe the consequences of hitting a Collar under either a Fixed Exchange Ratio or a Floating Exchange Ratio, Walkaway Rights means that one or both of the parties would have a right of termination. Walkaway Rights could be a party’s sole remedy or they could be an alternative to another structure. The exercise of a Walkaway Right may or may not have additional conditions and/or consequences for the parties, such as changing the Exchange Ratio or the reimbursement of certain costs. If so, the nature of any such conditions and/or consequences may differ depending on the particular Trigger event that occurs. | N1 |
| Wall Crossing | the act of making a person an Insider by providing them with Inside Information. Sometimes referred to as “bringing a party over the wall.” | N1 |
| Warrant | another name for an Option or a derivative Security which gives the holder the right to purchase Shares in a company at a predetermined price (the “strike” or “exercise” price). A Warrant is a longterm Option, usually valid for several years or indefinitely; sometimes a feature of Mezzanine Financing which provides a higher return to Mezzanine Investors. | N1 |
| Warranties and Indemnities | the legal undertakings often required by the Purchaser of a business or asset from the previous owners to confirm there will be no nasty surprises post-Completion | N1 |
| Warranty | assurances from one party to the others as to the state of affairs subject to the contract (e.g., as to the condition of the Target Company or business). Breach of Warranty will only give rise to a successful claim in damages if the claiming party can prove breach and quantifiable loss. | N1 |
| Waterfall | sometimes called a Payment Waterfall, generally refers to the pre-determined flow of funds and priority of Distributions or allocations between or among debt or equity holders. Typically, Payment Waterfalls are agreed contractually between parties to override any order of payments which may apply automatically by operation of law. Think of the funds in question as water running down a flight of stairs with a bucket placed on each step — the water (money) flows to the top step first and fills that bucket before the overflow continues on to the second step, and fills that bucket before proceeding to the third step, etc. So, if your deal stipulates you get paid before someone else, your proverbial bucket will be placed higher in the Waterfall. The one most likely to be left with an empty bucket (or in practice, an unpaid obligation) is of course whoever is at the bottom of the Waterfall. | N1 |
| WGL | acronym for Working Group List | N1 |
| White Knight | in a Hostile Takeover situation, a Friendly Bidder who makes a rival Bid for the Target Company in an effort to prevent a Hostile Bidder from acquiring the Target Company | N1 |
| Whitewash | the name given to the statutory process which Private Companies go through in order to be able to give lawful Financial Assistance. Involves lots of pieces of paper. 1. (UK) no longer relevant given recent changes to the Financial Assistance provisions in England and Wales 2. (HKG) Whitewash may also be used in the Takeovers context to refer to the waiver granted by the SFC to a Bidder for dispensation from making a Mandatory Offer in certain limited circumstances where the transaction is approved by the Offeree’s independent shareholders 3. (ITA) under Italian law, the resolution to be approved by a certain majority of the shareholders, required to avoid otherwise applicable provisions of law (e.g., see Financial Assistance) |
N1 |
| Wholly Unconditional: when an Acquirer in a Takeover has sufficient acceptances from the Offeree shareholders to satisfy the acceptance condition, and all other conditions (e.g., Anti-Trust Clearance) have been satisfied, allowing the Acquirer to proceed to transfer the purchase consideration and take control of the Target | N1 | |
| Widespread Auction | see Public Auction | N1 |
| Winding Up | the process of liquidating a company involving the appointment of an independent Insolvency practitioner (the Liquidator) who realizes the assets of a company in order to make a distribution to the creditors of that company 1. (HKG) in Hong Kong, there are two types of Winding Up, namely Compulsory Winding Up following a court order, and Voluntary Winding Up commenced voluntarily by the company’s Members, creditors or directors. Also referred to as Liquidation. |
N1 |
| Window Period | any time period during which specified action is permitted | N1 |
| Window Shop | a term used to describe the traditional No Shop provision in a Public Company Merger Agreement whereby the Target Company promises not to solicit or encourage a later Competing Bid, but which permits its Board of Directors, under certain circumstances, to respond to an Unsolicited Acquisition Proposal, by providing confidential information and engaging in discussions and negotiations of the terms of the Competing Bid | N1 |
| Withdrawal Rights | In relation to Takeovers, certain situations may arise whereby Offeree shareholders that have accepted an Offer are entitled to revoke their acceptances, such as but not limited to the following circumstances: (i) 21 days after the first Closing Date of an initial Takeover Offer if, by that time the Offer has not become or been declared unconditional; (ii) an Offeror fails to comply with the requirements of Rule 17.1 of the City Code — a competitive situation arises after a “no extensions statement” or “no increase statement” is published and the relevant Offeree shareholders seek to withdraw have accepted the Offer after the statement was published; and (iii) as determined by the UK Takeover Panel in accordance with Rule 13.6 of the City Code 1. (HKG) a similar concept exists under the HK Takeovers Code |
N1 |
| Withhold Vote | the act of not voting for a candidate for director. Withhold Vote is sometimes used more broadly to include voting against a director. | N1 |
| Withhold Vote Campaign | a campaign, often by a Proxy Advisory Firm or Corporate Governance Activist, to persuade shareholders to withhold their vote from one or several director candidates | N1 |
| Withholding Tax | tax levied frequently, but not exclusively, with respect to recurring payments, collected by requiring the payer to make a deduction on account of income tax before making the payment. Withholding Tax frequently applies to payments of dividends (although not those paid by UK companies, for example), interest and royalties. This liability is often reduced or eliminated under a Double Taxation Treaty. Essentially a method of tax collection, rather than a different tax as such. 1. (HKG) use of the term refers to the same concept but Hong Kong itself does not levy Withholding Tax |
N1 |
| Wolf Pack | a common name for actions by Hedge Funds or other Activist Investors that are seemingly parallel but that do not constitute them as a Group (e.g., for purposes of reporting under Section 13(d) of the US Securities Exchange Act or for purposes of determining beneficial ownership under a Poison Pill) | N1 |
| Working Capital | a measure of a company’s short-term Liquidity, calculated by subtracting current liabilities from current assets | N1 |
| Working Group List | a list containing the contact information for each banker, lawyer, accountant, and Issuer or Borrower representative working on a particular deal. See WGL and Players List. | N1 |
| Write-Down | for capital allowances purposes, the balance of expenditure with respect to which capital allowances have not yet been claimed | N1 |
| Written Consent | a Securities holder’s writing that approves a course of action. Under many state or national corporation laws, shareholders are permitted to act by Written Consent in lieu of voting at a Shareholders’ Meeting, either by the same majority vote that would be required at a Shareholders’ Meeting or by a unanimous vote. | N1 |
| Written Resolution | another term for a Written Consent | N1 |
| Zakat | the alms tax enforced in the Kingdom of Saudi Arabia | N1 |
| Zone of Insolvency | when a previously solvent Borrower nears Insolvency, the courts in certain jurisdictions (including the US and UK) have held that the Board of Directors’ Fiduciary Duties morph to include (or in certain circumstances are owed exclusively to) the Borrower’s creditors. Prior to entering the Zone of Insolvency, Borrowers do not owe their creditors any Fiduciary Duties. | 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.