The M&A Glossary

The core marketing document in a sale process. It presents the business, its financials, and its equity story to prospective buyers, and is central to setting valuation expectations before offers come in.

A secure online repository where a seller organizes the documents buyers need for due diligence: financials, contracts, legal records, and operational data. A clean VDR accelerates diligence and protects price.

A short, usually anonymized summary of a business for sale, sent to prospective buyers to gauge interest before confidential information is shared under NDA.

A document in which a buyer sets out the proposed price, structure, and key terms of a deal. Usually non-binding on price but binding on exclusivity and confidentiality. Signing an LOI starts confirmatory diligence, not the closing dinner.

The total value of a business: equity value plus debt, minus cash. The headline number most mid-market transactions are quoted on. LePrince Group advises on transactions of $10m to $100m+ in enterprise value.

Earnings before interest, taxes, depreciation, and amortization: the standard proxy for a mid-market company's operating cash generation, and the base most valuation multiples are applied to.

EBITDA restated to remove one-time, personal, or non-recurring items. Legitimate adjustments clarify; aggressive ones get reversed in diligence and cost credibility along with price.

An analysis, often by an independent accountant, verifying that reported earnings are real, recurring, and correctly stated. Buyers commission one in diligence; well-prepared sellers commission their own first.

The ratio at which a business is valued, most commonly enterprise value to EBITDA. Multiples vary by sector, scale, growth, and revenue quality; the recurring share of revenue is often the biggest single driver in services sectors.

The narrative case for why a business is valuable to a specific buyer: its position, its growth, and what the acquirer can do with it. Built well, it changes which buyers compete and what they pay.

An acquirer that operates in or adjacent to the target's industry and buys for strategic reasons: capability, channel, geography, or consolidation. Often able to pay for synergies a financial buyer cannot.

An investment firm, typically private equity, acquiring for financial returns: building platforms, adding on acquisitions, and exiting after a hold period.

In private equity buy-and-build strategies, the platform is the initial, larger acquisition in a sector; add-ons are smaller companies acquired and integrated into it. Add-on programs are a major source of buyer demand in services sectors.

A portion of the purchase price paid only if the business hits agreed targets after close. Useful for bridging valuation gaps; dangerous when the metrics are outside the seller's control. Sellers should treat earnout value as conditional, and advisors should not be paid on earnout value the seller never receives.

A portion of the price held back at close, typically to cover indemnity claims or adjustments, released over time if no issues arise.

A purchase-price adjustment ensuring the business is delivered with a normal level of working capital. One of the most commonly disputed mechanics in mid-market closings, and one of the most preparable.

The period after an LOI during which the seller agrees to negotiate only with one buyer. Valuable to the buyer, costly to the seller; its length and conditions are negotiated terms, not formalities.

The buyer's detailed verification of the business after an LOI: financial, legal, commercial, and operational. Where unprepared deals lose value and prepared ones hold it.

The two sides of M&A advisory: representing the seller of a business (sell-side) or the acquirer (buy-side). LePrince Group advises on both, with sell-side leading.

An advisory fee paid only when a transaction completes, usually as a percentage of the deal value. The core of outcome-based pricing.

A fee model in which the advisor's compensation is tied to the result of the transaction, the close and the terms achieved, rather than hours billed. It aligns the advisor's interest with the client's outcome and is how LePrince Group is paid.

The state of being prepared for a sale: clean financials, documented operations, defensible numbers, and a clear equity story. Achieved through pre-sale value creation, often starting a year or more before a process.