Operator-grade M&A glossary. 250+ terms with definitions, practical context, and cross-references. Used by WETYR advisors with paying clients — published free.
Earnings Before Interest, Taxe
EBITDA
Seller's Discretionary Earning
SDE
Letter of Intent
LOI
Confidential Information Memor
CIM
Quality of Earnings
QoE
Contingent purchase price tied
Earnout
Portion of purchase price held
Holdback
Post-close true-up to baseline
Working Capital Adjustment
Seller equity retained in the
Rollover Equity
Exclusivity clause in LOI proh
No-Shop Clause
Insurance against breach of se
Rep & Warranty Insurance (RWI)
Material Adverse Effect clause
MAE Clause
Joint tax election treating st
338(h)(10) Election
Qualified Small Business Stock
QSBS
Tiered success fee structure f
Lehman Formula
First/anchor acquisition in a
Platform Acquisition
Smaller acquisition added to a
Bolt-On Acquisition
Non-Disclosure Agreement
NDA
Final binding purchase contrac
Definitive Agreement
Seller commitment to compensat
Indemnification
Annual Recurring Revenue
ARR
Monthly Recurring Revenue
MRR
Net Revenue Retention
NRR
Customer Lifetime Value
LTV
Customer Acquisition Cost
CAC
Customer or revenue loss rate
Churn
SaaS health metric
Rule of 40
Revenue minus cost of goods so
Gross Margin
Earnings Before Interest and T
EBIT
Net Operating Income
NOI
Capitalization rate
Cap Rate
Owner discretionary expense ad
Add-Back
Commercial Due Diligence
CDD
Operational Due Diligence
ODD
Tax compliance and exposure re
Tax Due Diligence
Technology and security review
IT Due Diligence
Human resources and team revie
HR Due Diligence
Environmental risk and complia
Environmental Due Diligence
Secure document repository for
Data Room
Majority forces minority to se
Drag-Along Rights
Minority joins majority sale
Tag-Along Rights
Equity class with priority rig
Preferred Stock
Standard equity class
Common Stock
Distribution of proceeds in li
Waterfall
Management Buyout
MBO
Leveraged Buyout
LBO
Employee Stock Ownership Plan
ESOP
Tax-deferred ESOP exit
1042 Rollover
Real estate tax-deferred swap
1031 Exchange
Compensating for tax differenc
Gross-Up
Promissory note with personal
Recourse Note
Note limited to business asset
Non-Recourse Note
Seller-financed portion of pur
Seller Note
Subordinated seller note
Standby Note
Debt priority agreement
Subordination Agreement
Public lien filing on assets
UCC-1
UCC amendment or termination
UCC-3
Target working capital level a
Working Capital Peg
Predictable subscription or co
Recurring Revenue
Recurring customer purchases w
Repeat Revenue
Revenue dependence on few cust
Customer Concentration
Operational dependence on few
Supplier Concentration
Rate of customer or revenue lo
Churn Rate
Trailing Twelve Months
TTM
Last Twelve Months
LTM
Forward Twelve Months
FTM
Next Twelve Months
NTM
Enterprise Value
EV
Value to equity holders
Equity Value
Debt minus cash
Net Debt
Including debt impact
Levered
Excluding debt impact
Unlevered
Discounted Cash Flow
DCF
Weighted Average Cost of Capit
WACC
Internal Rate of Return
IRR
Multiple on Invested Capital
MOIC
Cash on Cash
CIC
Lead PE investor
Sponsor
Individual searching for a sin
Searcher
Holding Company
Holdco
General Partner
GP
Limited Partner
LP
GP performance fee
Carried Interest
Minimum return before carry ki
Hurdle Rate
Provision favoring GP after hu
Catch-Up
Most Favored Nation
MFN
Right to maintain ownership pe
Preemptive Rights
Protection against down rounds
Anti-Dilution
Anti-dilution adjustment formu
Ratchet
Earning equity over time
Vesting
Initial vesting threshold
Cliff
Vesting acceleration on trigge
Acceleration
Majority forces minority to se
Drag-Along Rights
Minority can join majority sal
Tag-Along Rights
Capitalization table
Cap Table
Including all option exercises
Fully Diluted
Reserved equity for employee g
Option Pool
Cash-settled equity-equivalent
Phantom Equity
Stock Appreciation Right
SAR
Restricted Stock Unit
RSU
Incentive Stock Option
ISO
Non-Qualified Stock Option
NSO
Tax election on restricted sto
83(b) Election
Tax code governing deferred co
409A
Independent fair market value
409A Valuation
Simple Agreement for Future Eq
SAFE
Debt that converts to equity
Convertible Note
Maximum conversion valuation
Valuation Cap
Conversion discount
Discount
Equal footing
Pari Passu
Most Favored Nation provision
MFN Clause
Priority payout for preferred
Liquidation Preference
Double dip
Participating Preferred
Single dip
Non-Participating Preferred
Limit on preferred participati
Participation Cap
Anti-dilution formula
Weighted Average Anti-Dilution
Harsh anti-dilution
Full Ratchet Anti-Dilution
Initial Public Offering
IPO
Sale of existing shares
Secondary
Acquisition of majority equity
Buyout
Restructuring of capital
Recapitalization
Debt-funded dividend
Dividend Recap
Public-to-private buyout
Take-Private
Sale of business unit
Carve-Out
Distribution of subsidiary to
Spin-Off
Public shell acquires private
Reverse Merger
SPAC merger completion
De-SPAC
Special Purpose Acquisition Co
SPAC
Private Investment in Public E
PIPE
Public offer to buy shares
Tender Offer
Shareholder authorization to v
Proxy
Legal duty of care and loyalty
Fiduciary Duty
Maximize value in change-of-co
Revlon Duties
Legal standard protecting boar
Business Judgment Rule
Notice of management buyout
Go-Private Letter
Material Adverse Change clause
MAC Clause
Standalone financials for sold
Carve-Out Financial Statements
Normalizing trailing twelve mo
TTM Adjustments
QoE deliverable
Quality of Earnings Report
Annualized current performance
Run-Rate
Earnings per share impact of a
Accretion / Dilution
Combined-value benefits of acq
Synergies
Post-close combination roadmap
Integration Plan
Initial post-close focus
100-Day Plan
First day post-close
Day 1
Transition Services Agreement
TSA
Buyer provides services to sel
Reverse TSA
Post-close employment contract
Employment Agreement
Restrictive covenant
Non-Compete
Restriction on poaching
Non-Solicit
Mutual no-bad-mouthing
Non-Disparagement
No going around the broker
Non-Circumvention
Fee if deal falls through
Break-Up Fee
Buyer-side break-up fee
Reverse Break-Up Fee
Pre-arranged debt for acquisit
Committed Financing
Buyer's right to walk if finan
Financing Contingency
Equity Commitment Letter
ECL
Debt Commitment Letter
DCL
Representations
Reps
Promises about ongoing conditi
Warranties
Reps with longer survival
Fundamental Reps
Standard business reps
General Reps
Maximum indemnification exposu
Indemnity Cap
Indemnity threshold
Indemnity Basket
Basket once exceeded recoverab
Tipping Basket
Basket deducted from claims
Deductible Basket
Indemnification time limit
Survival Period
Rep limited to seller's knowle
Knowledge Qualifier
Rep limited to material items
Materiality Qualifier
Removes materiality qualifiers
Materiality Scrape
Public-deal disclosure rep
10b-5 Rep
MAE rep
No MAE
Operating during sign-to-close
Ordinary Course of Business
Sign-to-close conduct rules
Interim Operating Covenant
Requirements for closing
Conditions Precedent
Hart-Scott-Rodino antitrust fi
HSR
Foreign investment review
CFIUS
Required external approvals
Third-Party Consents
Triggering event for various p
Change of Control
Transfer of contract rights
Assignment
Substitution of party to contr
Novation
Bank guarantee
Letter of Credit
Independent third party holdin
Escrow Agent
Current assets minus current l
Working Capital
Accounts Receivable
AR
Accounts Payable
AP
Goods held for sale
Inventory
Recognized but unpaid expenses
Accrued Liabilities
Unearned customer payments
Deferred Revenue
Standard deal pricing conventi
Cash-Free Debt-Free
Fixed-price European-style dea
Locked Box
Closing balance sheet
Completion Accounts
Confirmation of contract statu
Estoppel Certificate
Subordination Non-Disturbance
SNDA
RWI policy document
R&W Policy
Rep about retained employees
Retention Rep
Retention payment
Stay Bonus
Payment to employees on close
Transaction Bonus
Authoritative Sources & Further Reading
WETYR works alongside primary sources, regulators, and industry data providers when advising owners and operators. The references below are the same sources our advisory team uses when modeling deals, benchmarking multiples, and stress-testing assumptions. We encourage every owner, buyer, and operator to verify any data point that materially affects their decision against the underlying primary source.
Government & Regulatory
Primary Federal Sources
- U.S. SBA — 7(a) Loan Program for acquisition financing eligibility, terms, and lender list.
- SEC EDGAR for public-company comparables, 10-K disclosures, and recent strategic acquirer filings.
- IRS — Sale of a Business on Section 1060 asset-allocation reporting and tax treatment of asset vs stock sales.
- U.S. Bureau of Labor Statistics — Industries at a Glance for wage, employment, and growth data by NAICS code.
- U.S. Census Economic Census for industry size, firm counts, and revenue distributions.
- Federal Reserve Economic Data for prevailing rate environment underwriting.
M&A, Tax & Accounting Authorities
Standards & Reference Bodies
- AICPA for Quality of Earnings methodology and CPA standards governing transaction-related financial work.
- FINRA Rules and Guidance for understanding when a transaction crosses into broker-dealer territory.
- NACVA business valuation credentialing body and standards (CVA designation).
- USPAP — Uniform Standards of Professional Appraisal Practice for valuation engagement standards.
- Investopedia — EBITDA reference page for definitional alignment with our glossary.
- Harvard Business Review — Mergers and Acquisitions archive on integration and post-close value creation.
For deeper transaction-specific data, the GF Data and PitchBook private-company transaction databases publish quarterly multiple ranges by industry size band that we cross-reference against our own pipeline benchmarks. Owners considering a sale should also review the Pepperdine Private Capital Markets Report (free, annual) for current cost-of-capital and lender appetite data across the lower middle market. Buyers underwriting search-fund or holdco theses commonly pair Stanford GSB's Search Fund Study with the IBBA Market Pulse report, which tracks multiples for sub-$50M transactions quarterly. None of these sources replace deal-specific advisory, but they give owners and operators the same reference points professional acquirers are using on the other side of the table.
Related WETYR Resources
Every WETYR resource ladders into a structured engagement framework. Whether you are diagnosing readiness, modeling a number, or preparing for a specific transaction phase, the resources below cover the most common owner and operator workflows. All tools are free; all guides are operator-written; all engagements start with a confidential conversation.
Service Hubs
Engagement Pillars
Free Calculators
Decision Tools
Long-Form Guides
Operator-Written
Reference
Glossary & FAQ
Free Downloads
Checklists & Templates
Industries
Niche Coverage
If you are not sure where to start, the Exit Readiness Score takes about four minutes and produces a one-page diagnostic on the value drivers most likely to compress your multiple. From there the natural next step is either a long-form guide covering your specific situation, a focused glossary term lookup, or a confidential introductory call with our team to discuss whether WETYR's advisory or operator-buyer engagement is a fit. Our team responds to every inbound inquiry within one business day.