The following are a list of terms in the UK’s merger and acquisition sector that Altius Corporate Finance has collated for ease of reference.
Acquisitions
Acquisitions involve one company buying the majority or all of another company’s shares to take control of the business, or a specific asset. In the UK, acquisitions are a key component of corporate strategy, allowing companies to grow quickly, diversify offerings, or eliminate competition. These transactions may be friendly or hostile and are governed by stringent regulatory and compliance frameworks, particularly when listed entities are involved.
An acquisition may involve purchasing the entire company (share sale) or selected assets and liabilities (asset sale). In many SME transactions, an asset sale is more common than a share purchase, especially when the buyer is concerned about inheriting potential liabilities. A successful acquisition can provide access to new markets, customers, and technologies, significantly enhancing the buyer’s strategic position.
Asking Price
The asking price is the initial amount a seller seeks for a business or asset. While it provides a benchmark for negotiations, it is not always reflective of the final sale price. Sellers typically set the asking price based on valuations, market trends, and their own financial objectives, though it can be subject to adjustment following due diligence.
In the UK M&A market, particularly in the sale of SMEs, the asking price often includes consideration of goodwill, tangible and intangible assets, and normalised earnings. However, it is common for deals to be structured with flexibility, such as earn-outs or deferred payments, to bridge gaps between seller expectations and buyer affordability.
Asset Sale
An asset sale involves selling individual business components – like equipment, inventory, or customer contracts – instead of the entire legal entity. Buyers typically favour this structure to prevent assuming any liabilities. Sellers may face different tax implications compared to a share sale, and careful allocation of the sale price among assets is crucial for both parties.
Barrier to Entry
Barriers to entry are challenges that hinder new competitors from entering an industry, such as strong brand loyalty, large start-up and sunk costs, or strict regulations. Industries with significant barriers are often less competitive, allowing established players to maintain pricing power and market share.
Barriers to entry are one of the strongest reasons to conduct an acquisition.
Balance Sheet Adjustment
Balance sheet adjustments – in accounting – are post-completion modifications made to the purchase price of a company based on the actual financial position at closing. In transactions, these adjustments commonly revolve around net working capital, debt, and cash positions to ensure a fair valuation at completion.
Such adjustments protect the buyer by aligning the agreed value with the actual financial health of the business. If, for example, there is more debt than anticipated or working capital falls below the target, the purchase price may be reduced accordingly. These mechanisms are typically outlined in the Sale and Purchase Agreement (SPA).
Bolt-On Acquisitions
Bolt-ons refer to the acquisition of (typically) smaller companies by a larger business, often private equity-backed, to enhance value and achieve economies of scale. These transactions are prevalent in fragmented markets like healthcare and childcare in the UK, where they allow consolidators to grow rapidly while maintaining service continuity.
Bolt-ons offer strategic benefits such as geographic expansion, complementary services, or increased market share. Buyers typically target businesses with strong reputations and consistent financials. The integration process post-acquisition is crucial and can determine the overall success of a bolt-on strategy.
Typically, the company being acquired will be for the buyer to enter new product markets or geographies whilst retaining some level of operational independence, as well as potentially branding independence. This contrasts with a ‘tuck-in acquisition’.
Read a more in-depth article here: Bolt-ons
The British Private Equity & Venture Capital Association (BVCA)
The British Private Equity & Venture Capital Association (BVCA) represents the UK’s private equity and venture capital industry, providing advocacy, research, and training. It encourages the adoption of industry best practices and active involvement in policy development.
Members include private equity firms, institutional investors, and advisory businesses, all of whom benefit from networking opportunities and up-to-date industry insights.
For more information about ACF’s membership of the BVCA, read: Altius Group Joins BVCA as Sole Broker
Business Appraisal
An appraisal is a professional evaluation of a business’s market value, often used during sales, mergers, or for financing purposes. It considers factors like assets, financial performance, market trends, and comparable sales and is used to set a guide price for a business sale
Business Asset Disposal Relief
Business Asset Disposal Relief (BADR) in the UK, previously known as Entrepreneurs’ Relief, offers qualifying individuals a reduced Capital Gains Tax (CGT) rate on the disposal of certain business assets. This tax relief is capped at a lifetime limit of £1 million.
To qualify, the seller must meet certain criteria related to shareholding, directorship, and ownership duration. BADR can significantly influence a seller’s decision-making process and timing of exit, making it a vital consideration in the structuring of deals and personal tax planning.
Read a more in-depth article here: Business Asset Disposal Relief (BADR)
Business Broker
An intermediary between sellers and buyers of businesses. Following an initial appraisal of the market value of a business, brokers work with a business owner to handle the marketing and sales negotiations involved in the business sale. A good broker will provide support and guidance throughout the sale process, liaising with both parties and their professional advisers to ensure a smoother outcome.
Buy-In Management Buyout (BIMBO)
A Buy-In Management Buyout (BIMBO) is a transaction where external investors and the existing management team work together to acquire a business. The management team retains control, while external investors provide the capital. This model allows the company to benefit from both internal leadership and external financial support.
In a BIMBO, the management team’s knowledge of the business combines with external funding, creating a strong foundation for growth. This structure is attractive to both parties, as investors gain experienced leadership, while management increases their ownership without shouldering the full financial burden. It combines aspects of both a Management Buyout (MBO) and a Buy-In Buyout (BBO).
Read a more in-depth article here: Buy-In Management Buyout (BIMBO).
Capital Structure
Capital structure describes the way a company funds its operations and expansion, using a combination of debt, equity, or hybrid instruments. A well-structured balance promotes financial resilience and sustainable growth. Companies with too much debt may face higher financial risk, while those relying heavily on equity may dilute ownership and control.
Cash Free, Debt Free
A cash free, debt free (CFDF) deal structure means the business is valued assuming it will be transferred without cash or interest-bearing debt. This concept is standard in UK merger and acquisition transactions to ensure that the buyer does not take on liabilities unrelated to the operational performance of the company.
The purchase price is often adjusted at completion through mechanisms like balance sheet adjustments to reflect actual cash, debt, and working capital positions. It allows both parties to agree a fair enterprise value while keeping the deal economically neutral with respect to financing structures.
Confidentiality Agreement
A confidentiality agreement, often referred to as a Non-Disclosure Agreement (NDA), is used in the early stages of a transaction to protect sensitive information. This document prevents prospective buyers or third parties from disclosing or misusing proprietary information about the target company.
In the UK, NDAs are a standard feature of M&A processes and help maintain discretion around potential deals. They are particularly important in competitive sale processes where multiple bidders may have access to commercially sensitive data.
Deferred Payment
Deferred payment is a structure whereby part of the purchase price is paid after completion, based on agreed milestones or timeframes. This is often used in UK SME transactions to bridge valuation gaps or manage cash flow considerations.
Deferred payments may be fixed or linked to performance metrics (as in earn-outs), and they provide reassurance to buyers while offering sellers the opportunity to realise additional value. The terms are usually formalised in the SPA (Sale and Purchase Agreement) and may include clauses for default, interest, or acceleration.
Depreciation
Depreciation reflects the gradual decline in value of tangible assets, such as vehicles and machinery, over time as a result of wear and tear. It is recorded as an expense in financial statements, helping businesses spread the cost of assets over their useful life and reduce taxable income.
Disclosure Letter
A disclosure letter is a legal document provided by the seller that outlines exceptions or qualifications to the warranties included in the Sale and Purchase Agreement. It plays a vital role in risk allocation and ensures transparency between parties.
A well-drafted disclosure letter helps protect the seller from post-completion claims and gives the buyer a more accurate picture of the company’s operations and liabilities. The disclosure process is typically a key element of the due diligence stage.
Due Diligence (DD)
Due diligence (DD) is the investigative process undertaken by a buyer to assess the target company’s financial, operational, legal, and commercial standing before completing a transaction. In UK mergers and acquisitions, due diligence helps identify risks, confirm the value of the business, and uncover any hidden liabilities. It is essential for making informed investment decisions and structuring suitable legal protections within the deal.
The scope of due diligence may include reviewing management accounts, contracts, employee matters, compliance records, and intellectual property. The findings often inform negotiations, particularly concerning warranties, indemnities, and potential price adjustments. Thorough due diligence is key to mitigating post-completion surprises.
Read a more in-depth article here: Due Diligence (DD)
Earn-Out
An earn-out is a deferred payment structure where a portion of the purchase price is contingent upon the future performance of the acquired business. Common in UK transactions, earn-outs align seller incentives with post-sale success and reduce upfront cost for the buyer. Performance targets might include revenue thresholds, profit margins, or customer retention.
While earn-outs can bridge valuation gaps, they may also lead to disputes if terms are not clearly defined or if control dynamics shift post-completion. Legal drafting must address measurement criteria, timing of payments, and potential scenarios such as early termination or underperformance.
For a more in-depth article read here: Earn-outs
EBIT (Earnings Before Interest and Taxes)
EBIT represents a company’s operating profit before interest and tax expenses are deducted. It’s a key indicator of operational performance. By excluding financing and tax factors, EBIT allows investors to compare profitability across companies with different capital structures or tax environments.
EBITDA
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortisation. It is a widely used financial metric in UK M&A for assessing a company’s operating performance without the impact of capital structure or non-cash expenses. EBITDA provides a clearer view of profitability and is frequently used in valuation multiples.
It serves as a critical foundation for negotiating price and assessing return on investment.
Read a more in-depth article here: EBITDA
EBITDA after Adjustments
Adjusted EBITDA refines the standard EBITDA figure by excluding irregular or non-recurring expenses, offering a clearer view of core operating performance. Adjustments might include restructuring costs, legal settlements, or one-time consulting fees, providing a more normalised financial snapshot.
Enterprise Value
Enterprise Value (EV) is a comprehensive valuation measure representing the total value of a company, including debt and excluding cash. In the UK M&A market, EV is frequently used alongside EBITDA to calculate valuation multiples, offering a more accurate picture of a company’s worth regardless of its capital structure.
EV allows investors and buyers to compare companies across industries and sizes. It is particularly relevant in “cash free, debt free” transactions, where the agreed EV forms the basis for adjusting the final equity price through mechanisms like balance sheet adjustments.
Escrow
An escrow is a legal arrangement where a third party holds funds or assets on behalf of two parties during a transaction. It ensures that both buyer and seller meet their obligations before the money or assets are released, adding security and trust to deals.
Exit Strategy
An exit strategy is a planned approach for owners or investors to realise value from their business investment, often through a sale, flotation, or management buyout. Exit strategies play a vital role in succession planning and unlocking the value of a business.
Well-defined exit strategies can influence business decisions years in advance of a sale, including financial reporting, staff structures, and growth initiatives. Buyers and investors may also assess the clarity and feasibility of an exit strategy as part of their due diligence.
Financials
Financials encompass a business’s past and present financial data, such as profit and loss statements, balance sheets, cash flow reports, and management accounts. Reviewing accurate and up-to-date financials is essential to determine value and risk.
Buyers scrutinise financials during due diligence to assess profitability, working capital trends, and potential anomalies. Strong financials increase buyer confidence and improve the likelihood of securing favourable deal terms or third-party financing.
First In, First Out (FIFO)
First In, First Out (FIFO) is an inventory valuation approach where the oldest stock (first in) is sold before newer stock (first out). It often reflects physical inventory flow. In times of inflation, FIFO results in lower cost of goods sold and higher taxable income, compared to other methods such as Last In, First Out (LIFO).
Furniture, Fixtures and Equipment (FF&E)
Furniture, Fixtures and Equipment (FF&E) refers to the tangible assets such as desks, computers, shelving, and office fittings that are used in a business’s daily operations. In UK M&A, FF&E is often itemised separately in asset sales, particularly for sectors like childcare, hospitality, and healthcare.
These assets may be included in the asking price or subject to separate valuation. Buyers often assess the age, condition, and replacement cost of FF&E during due diligence, especially when operational continuity post-acquisition is a key consideration.
Goodwill
Goodwill represents the premium a buyer pays over the net asset value of a business, reflecting intangible elements such as brand reputation, customer relationships, and staff expertise. In UK M&A accounting, goodwill is recorded as an asset when a business is purchased for more than the fair value of its net assets.
High goodwill values may indicate strong market positioning or recurring income streams, but they also warrant careful examination to ensure sustainability. Goodwill is often subject to impairment testing post-acquisition, particularly if business performance declines.
Growth Capital
Growth capital is investment funding used to accelerate expansion in established businesses. It’s typically used for entering new markets, acquisitions, or product development.
Unlike venture capital, it’s less risky and often involves minority ownership of a long-established and profitable business, allowing founders to retain control while scaling operations. Venture capital typically invests in early-stage startups searching for innovative solutions in sectors such as technology and pharmaceutical firms, which bring high risk-to-reward ratios.
Heads of Terms
Heads of Terms (HoT) is a preliminary, non-binding agreement outlining the key terms of a proposed transaction. In the UK, it sets the groundwork for formal legal documentation and typically covers price, structure, exclusivity, and timelines.
While not legally enforceable (except for certain clauses like confidentiality), a well-drafted HoT helps align expectations and facilitates smoother legal drafting. It also gives both parties a clear reference point as negotiations progress.
Read a more in-depth article here: Heads of Terms (HoT)
Horizontal Merger
A Horizontal Merger occurs when two companies that operate in the same industry and offer similar products or services merge. This type of merger allows the combined entity to increase its market share, reduce competition, and benefit from economies of scale.
The main advantage of a horizontal merger is the potential for cost savings through the consolidation of operations, such as marketing, production, or distribution. By merging with a competitor, companies can enhance their market position, broaden their customer base, and improve overall efficiency.
Read a more in-depth article here: Horizontal Merger
Indemnities
Indemnities are contractual promises made by the seller to compensate the buyer for specific losses or liabilities arising post-completion. In the UK mergers and acquisitions sector, they provide the buyer with a degree of protection against risks that are known at the time of sale, but which may impact operations or profitability, after the deal closes.
Unlike warranties, which are general statements about the state of the business, indemnities relate to particular matters – such as outstanding litigation or tax exposures – and typically result in pound-for-pound reimbursement. Negotiating the scope and duration of indemnities is a key part of the legal drafting process.
Information Memorandum
An Information Memorandum (IM) is a confidential document prepared by the seller or their advisers to market the business to potential buyers. The IM outlines key financial, operational, and strategic details to assist buyers in their initial assessment of the opportunity.
It typically includes company history, market positioning, client base, staffing, and financial performance. While informative, the IM is not legally binding and should not be relied upon in isolation. Buyers are expected to conduct their own due diligence before proceeding further.
Intangible Assets
Intangible assets are non-physical items like brand value, intellectual property, customer relationships and software that enhance a business’s worth. Intangible assets often form a significant component of the purchase price, especially in service-based or technology sectors.
Valuing intangible assets can be challenging due to their subjective nature, but they can strongly influence goodwill and long-term profitability. Buyers will evaluate the legal protection and commercial strength of these assets during due diligence.
Read a more in-depth article here: Intangible Assets
Intellectual Property
Intellectual property (IP) includes legally protected intangible assets like trademarks, patents, copyrights, and trade secrets. IP can significantly enhance a business’s value, especially in sectors like component manufacturing, media, and pharmaceuticals where innovation and trade marked goods are a core asset.
Joint Venture (JV)
A joint venture (JV) is a collaborative arrangement between two or more parties to achieve a specific business aim or project, with shared risks, assets, and benefits. JVs are commonly used to access new markets, share infrastructure, or pool expertise.
The legal structure of a JV can vary—from contractual agreements to the formation of a new limited company. Key terms typically address governance, decision-making, capital contributions, and exit provisions. A well-structured JV agreement reduces the risk of disputes and misalignment.
Legals
Legals refers to the legal aspects of a business transaction, such as contracts, agreements, and regulatory compliance. In a merger, acquisition, or sale, these legal documents ensure that the transaction follows all required laws and protects both parties. They cover areas like warranties, liabilities, intellectual property, and regulatory requirements.
The legal process ensures that all aspects of the transaction are clear, fair, and enforceable. Legal professionals play a key role in reviewing these documents to prevent disputes and ensure the transaction is in line with applicable laws, protecting the interests of all parties involved.
Leveraged Buyout (LBO)
A leveraged buyout involves purchasing a business mainly through borrowed capital, with the target company’s assets typically serving as collateral. LBOs are popular among private equity firms seeking to amplify returns on investment.
While LBOs can enable larger transactions with less equity outlay, they carry increased financial risk due to the debt burden. Post-acquisition, strong cash flow is crucial to servicing the debt and ensuring the long-term viability of the business.
Long-term Debt
Long-term debt includes loans or bonds payable beyond one year. It is a common way for businesses to fund large investments or capital projects. Managing long-term debt carefully is essential, as it impacts interest expenses, financial leverage, and overall creditworthiness.
Management Accounts
Management accounts are internal financial reports that provide insights into a business’ recent trading performance, typically covering profit and loss, cash flow, and balance sheet metrics. Management accounts are crucial for assessing short-term trends ahead of a transaction.
Unlike audited accounts, management accounts are not required to meet statutory standards, but they offer real-time insights and are often a focus of buyer due diligence. Strong, consistent management accounts can increase buyer confidence and support valuation assumptions.
Management Buy-In (MBI)
A Management Buy-In (MBI) occurs when external managers purchase a controlling interest in a company and assume executive roles. In the UK, MBIs are often driven by individuals or teams with relevant industry experience seeking to revitalise underperforming businesses.
MBIs are typically funded through a combination of personal capital, third-party financing, and possibly private equity backing. Sellers are often cautious of MBI candidates, as they may lack internal knowledge of the company, and success depends heavily on post-acquisition integration.
Read a more in-depth article here: Management Buy-In (MBI)
Management Buy-Out (MBO)
A Management Buy-Out (MBO) is a transaction where the existing management team acquires the business they currently operate. Management Buy-Outs are often pursued when owners wish to retire or exit while ensuring continuity and stability. The internal team’s familiarity with the business can lead to smoother transitions and fewer operational disruptions.
MBOs are usually financed through a mix of management equity, third-party debt, and possibly private equity investment. Lenders and investors will closely examine the team’s credibility, business performance, and future strategy before committing to the deal.
Read a more in-depth article here: Management Buy-Out (MBO)
Marketing Information
Marketing information refers to the suite of materials prepared to present a business for sale to prospective buyers. In UK mergers and acquisitions, this typically includes teaser documents, buyer profiles, and Information Memoranda, all designed to attract interest while maintaining confidentiality.
Effective marketing information is concise, compelling, and tailored to the target audience. It provides a snapshot of the business’s unique selling points, financial highlights, and growth potential. Strong marketing collateral can significantly influence buyer engagement and perceived value.
Mergers
Mergers bring together two businesses to create a new, consolidated organisation. In UK corporate finance, mergers are usually structured to enhance market share, reduce costs, or gain access to new capabilities. Mergers may be between equals (a “merger of equals”) or with one party assuming a dominant role.
Unlike acquisitions, where one party typically purchases another, mergers are often more collaborative and require detailed integration planning. Regulatory approval may also be necessary, especially where the combined entity could affect market competition.
Multiples
An enterprise value multiple compares a company’s enterprise value to a performance metric, typically EBITDA. It enables investors to assess a company’s value in relation to its earnings. High multiples may suggest growth potential – or overvaluation – while low multiples could signal undervaluation or risk.
Non-Compete Clause
A non-compete clause is a legal agreement that restricts the seller from starting or joining a rival business for a set period and within a certain location. In the UK mergers and acquisition market, these clauses are vital for protecting the goodwill and customer base of the acquired company.
Buyers seek robust non-compete terms to ensure the seller does not immediately undermine the business post-sale. The enforceability of such clauses depends on their reasonableness – overly restrictive terms may be challenged in court.
Operations Information
Operations information covers the day-to-day running of a business and includes details on staffing, systems, logistics, suppliers, and compliance. In the UK mergers and acquisition process, buyers request this data to assess how the business functions and to identify any operational dependencies or risks.
A clear and comprehensive operations pack helps buyers plan for post-completion integration and can be pivotal in reassuring them of the business’ viability. Gaps in this information may result in delays or renegotiation of deal terms.
Private Equity Firm
Private equity firms invest in businesses with the goal of improving performance and realising returns through future sale or flotation. In the UK, they are active participants in mergers and acquisitions, particularly in supporting Management Buy-Outs, Management Buy-Ins, and growth-stage investments.
These firms typically provide both capital and strategic input, often taking a board seat to guide decision-making. Private equity backing can be attractive to sellers seeking a partial exit or businesses requiring growth capital.
Prospective Buyers
Prospective buyers are individuals or entities expressing interest in acquiring a business. In UK M&A, they may include conglomerates, large and small trade buyers, private equity firms, high-net-worth individuals, or management teams. Each buyer type brings different motivations, funding sources, and deal preferences.
Sellers often qualify prospective buyers based on financial capacity, sector experience, and alignment with their desired exit outcomes. Maintaining confidentiality while engaging with multiple parties is a critical aspect of this phase of the process.
Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) measures how effectively a company uses its capital to generate profit, calculated as net operating profit after taxes, divided by invested capital.
It’s a critical metric for assessing value creation, especially in capital-intensive industries.
Rollup
A rollup involves acquiring multiple smaller businesses in the same sector and combining them into one larger entity. The aim is to achieve cost efficiencies such as with economies of scale, grow market presence, and enhance valuation multiples through business integration.
Sale and Purchase Agreement
The Sale and Purchase Agreement (SPA) is the key legal document that formalises and completes the transfer of a business. In UK mergers and acquisitions, the Sale and Purchase Agreement details the terms of the transaction, including price, payment structure, warranties, indemnities, and completion conditions.
The SPA is the culmination of negotiations and due diligence. Careful drafting and legal review are essential, as it governs the rights and obligations of both parties post-completion. It is often accompanied by disclosure letters and ancillary documents.
Read a more in-depth article here: Sale and Purchase Agreement
SME
SMEs (Small and Medium-sized Enterprises) refer to businesses with a smaller scale in terms of employees and revenue.
SMEs make up the vast majority of businesses in the UK. Typically, these businesses have fewer than 250 employees, with turnover up to £44m. SMEs play a vital role in the economy by driving innovation, creating jobs, and contributing to local growth.
SMEs face challenges such as limited access to capital and a need for operational efficiency. However, they benefit from agility and flexibility, enabling them to adapt quickly to market changes. These businesses are essential for economic diversification and often form the backbone of many industries.
Surplus Cash
Surplus cash denotes the excess funds a business retains over and above its routine operational requirements. This cash is often considered an asset in a business sale, as it can be used for investments, debt repayment, or reinvestment into the business.
In acquisitions, surplus cash may be factored into the sale price or negotiated separately. For the buyer, it provides additional financial flexibility, while for the seller, it can make the business more attractive by demonstrating financial strength and resources available for reinvestment.
Tangible Assets
Tangible assets are physical items a business owns, such as buildings, machinery, or inventory. They form the backbone of a company’s operational capacity.
Unlike intangible assets, tangibles are easier to value and are often used as collateral for loans or as a base for asset sales.
Trade Buyer
A Trade Buyer is a company or individual purchasing another business within the same industry or sector. These buyers seek acquisitions that help increase market share, expand product lines, or improve competitive positioning. They are typically strategic investors who aim to integrate the acquired company into their existing operations.
Trade buyers are familiar with the industry, making them more likely to pay a premium for assets that align with their strategic objectives. Their goal is to achieve synergies, such as cost savings or market expansion, through the acquisition, rather than purely financial returns.
Vendor Finance
Vendor finance is a funding arrangement in which the business seller lends a portion of the purchase price to the buyer to facilitate the acquisition. Instead of the buyer securing all the funding through traditional methods, the seller agrees to lend a portion of the sale price, often with an agreed repayment schedule and interest.
This method benefits both parties: the buyer gains access to funding with more flexible terms, while the seller can receive a higher sale price or a quicker sale. Vendor finance is commonly used when buyers are unable to secure full financing from banks or other sources, offering a viable option for both the buyer and the seller.
Read a more in-depth article here: Vendor Finance.
Vertical Merger
A vertical merger happens when two companies at different levels of the supply chain within the same industry merge. This type of merger allows companies to streamline their operations, reduce costs, and increase efficiency by integrating their processes, such as production, distribution, or retail.
The main advantage of a vertical merger is that it can create greater control over the supply chain, reducing reliance on third-party suppliers or distributors. It also allows the companies involved to capture more value from the entire production process, potentially improving profitability and market competitiveness.
Read a more in-depth article here: Vertical Merger
VIAMBO: Vendor Initiated Assisted Management Buy Out
A Vendor Initiated Assisted Management Buyout (VIAMBO) is a buyout in which the seller supports the management team in acquiring the business they work for. In this structure, the vendor typically provides financial assistance or other support to help the management team complete the buyout. This could include deferred payments or a partial seller financing arrangement.
The key benefit of a Vendor Initiated Assisted Management Buyout is that it allows the management team to take control of the business with the backing of the current owner. The vendor can ensure a smooth transition while still benefiting from the sale. This structure offers management an opportunity to own the business without needing to secure all the financing independently.
Read a more in-depth article here: Vendor Initiated Assisted Managment Buy Out (VIAMBO)
Warranties
Warranties are promises made by the seller regarding the condition of a business being sold. These assurances typically cover aspects such as financial accuracy, asset condition, and legal compliance. Warranties help protect the buyer by ensuring that the business is as represented.
If the warranties are found to be false or incomplete, the buyer may seek legal compensation or other remedies. These legal promises provide a framework for managing risks and ensuring that both parties have clear expectations throughout the transaction.
Weighted Average Cost of Capital (WACC)
Weighted Average Cost of Capital (WACC) is the average rate a company pays to finance its assets, weighted across all sources of capital including debt and equity. It serves as a benchmark for investment decisions; projects must typically return more than the WACC to add value.
Working Capital
Working capital is the gap between a company’s current assets and current liabilities. It’s a measure of a business’s short-term liquidity and operational efficiency.
Positive working capital suggests a company can meet its obligations, while negative working capital may indicate cash flow issues
Altius Corporate Finance is part of the Altius Group.
