|Z| M&A Term Definition Note Z-spread Fixed number of basis points that would be added to the gilt yield curve at all durations so that the present value of a bond’s future payments equals its market price. Z-spread is a measure of a bond’s credit risk. Therefore, it will be zero for gilts and high…
Category: Glossary of M&A
Glossary of M&A Jargon and Terminology_Y
|Y| M&A Term Definition Note yield Return on an investment expressed as a percentage. Most often used to refer to the gross redemption yield on a bond, being the return to a purchaser if the bond is held to maturity ignoring taxes and the prospect of default. Another term for interest rate. (See also nominal…
Glossary of M&A Jargon and Terminology_W
|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…
Glossary of M&A Jargon and Terminology_V
|V| M&A Term Definition Note Valuation the act or process of developing an opinion or conclusion of value at a Valuation Date using a Premise of Value, a Standard of Value, and one or more Valuation Approaches. Also known as Appraisal. N7 Valuation Approach a general manner of estimating a value that uses one or…
Glossary of M&A Jargon and Terminology_U
|U| M&A Term Definition Note Unlevered Beta a measure of Beta reflecting a capital structure without debt. Also known as asset beta. Contrast with Levered Beta N7 Unlevered Cost of Capital the expected Rate of Return that the market requires in order to attract funds to a particular investment, assuming an unlevered Capital Structure. See…
Glossary of M&A Jargon and Terminology_T
|T| M&A Term Definition Note T+1, T+2, T+3 Abbreviations that refer to the settlement date of security transactions. The T stands for the day the transaction takes place. The numbers 1, 2 and 3 denote how many days after the transaction date the settlement or the transfer of money and security ownership takes place. N6…
Glossary of M&A Jargon and Terminology_S
|S| M&A Term Definition Note S Corporation a corporation that has, with the consent of its shareholders, elected to be treated as a Pass-Through entity (i.e., not separately taxable on its own income) for federal tax purposes under the “small business corporation” rules in Subchapter S of the US Internal Revenue Code. The shareholders, limited…
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Glossary of M&A Jargon and Terminology_R
|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…
Glossary of M&A Jargon and Terminology_Q
|Q| M&A Term Definition Note Q&A Questions and answers (see also Q&A Process). N2 Q&A Process This gives buyers the opportunity to obtain further information by asking questions arising from the documents made available for Due Diligence. Depending on the structure of the transaction, the Q&A process may be highly formalised. Particularly in an Auction…