M&A Glossary — Business Acquisition Terms Explained
A comprehensive glossary of mergers and acquisitions terminology, with Swiss-specific context. Whether you're buying or selling a business in Switzerland, these definitions will help you navigate the process.
A
B
- Break-up Fee
- A penalty payment agreed upon in the LOI or SPA that compensates one party if the other withdraws from the deal without justified cause. Break-up fees typica… Read more →
C
- Cap Table
- Short for capitalization table — a detailed breakdown of a company's ownership structure showing all shareholders, their share classes, and ownership percent… Read more →
- CIM (Confidential Information Memorandum)
- A comprehensive document prepared by the seller (or their advisor) that provides detailed information about the business to prospective buyers. It typically… Read more →
- Closing
- The final step of an acquisition where ownership is officially transferred. In Switzerland, closing involves executing the SPA, transferring shares (often vi… Read more →
D
- DCF (Discounted Cash Flow)
- A valuation method that estimates the present value of a business based on its projected future cash flows, discounted back at an appropriate rate (typically… Read more →
- Due Diligence
- The comprehensive investigation and analysis of a target business before acquisition. Covers financial records, legal compliance, tax filings, contracts, emp… Read more →
E
- Earnout
- A deal structure where part of the purchase price is contingent on the business achieving certain performance targets (revenue, EBITDA, customer retention) a… Read more →
- EBITDA
- Earnings Before Interest, Taxes, Depreciation, and Amortization — the most widely used profitability metric in M&A. EBITDA represents a company's core operat… Read more →
- Enterprise Value
- The total value of a business including both equity and net debt. Calculated as equity value plus debt minus cash. Enterprise value represents what it would… Read more →
- Equity Value
- The value of a business attributable to its shareholders, calculated as enterprise value minus net debt. This is the actual price a buyer pays for the shares… Read more →
- Escrow
- A financial arrangement where a portion of the purchase price (typically 5-15%) is held by a neutral third party for a set period after closing. Escrow prote… Read more →
H
- Handelsregister (Swiss Commercial Register)
- Switzerland's official public register of companies, maintained at the cantonal level. All share transfers for GmbH companies and board changes must be regis… Read more →
- Holding Company
- A company whose primary purpose is to own shares in other companies. In Swiss M&A, holding structures are commonly used for tax-efficient acquisitions, as Sw… Read more →
I
- Indemnification
- A contractual obligation where the seller agrees to compensate the buyer for specific losses arising from breaches of representations and warranties or undis… Read more →
K
- Key Person Risk
- The risk that a business's value is heavily dependent on one or a few individuals — often the founder or owner. High key person risk is a common concern in S… Read more →
L
- Letter of Intent (LOI)
- A preliminary, typically non-binding agreement between buyer and seller outlining the key terms of the proposed acquisition (price, structure, timeline, excl… Read more →
- Liquidation Preference
- A clause that determines the order and amount of payouts to different shareholder classes if the company is liquidated or sold. More common in venture-backed… Read more →
M
- MBI (Management Buy-In)
- An acquisition where an external management team purchases and takes over a company. MBIs are common in Swiss succession situations where the departing owner… Read more →
- MBO (Management Buy-Out)
- An acquisition where the company's existing management team purchases the business from the current owners. MBOs are a popular succession solution in Switzer… Read more →
N
- NDA (Non-Disclosure Agreement)
- A Non-Disclosure Agreement (NDA) is a legally binding contract that prevents the receiving party from sharing confidential information. On Alpine Business Ex… Read more →
- Net Working Capital
- Current assets minus current liabilities — representing the short-term operational liquidity of a business. In Swiss M&A, the SPA typically defines a target… Read more →
- Non-Compete Agreement
- A contractual clause preventing the seller from starting or joining a competing business for a defined period (typically 2-5 years) and geographic area after… Read more →
- Normalized Earnings
- A company's earnings adjusted to remove one-time, non-recurring, or owner-specific expenses (e.g., above-market owner salary, personal expenses run through t… Read more →
R
- Representations & Warranties
- Statements of fact made by the seller (and sometimes the buyer) in the SPA about the condition of the business — covering financials, legal compliance, tax s… Read more →
- Revenue Multiple
- A valuation method that values a business as a multiple of its annual revenue. Used primarily for high-growth or pre-profit businesses where EBITDA multiples… Read more →
S
- SDE (Seller's Discretionary Earnings)
- A measure of a business's earnings that adds back the owner's salary, benefits, and discretionary expenses to net profit. SDE is the most common valuation me… Read more →
- SPA (Share Purchase Agreement)
- The definitive legal contract governing the sale of a company's shares. The SPA details the purchase price, payment terms, representations and warranties, in… Read more →
- Succession Planning (Nachfolgeplanung)
- The process of preparing a business for ownership transition — whether to family members, employees, or external buyers. With over 80,000 Swiss SMEs facing s… Read more →
V
- Valuation Multiple
- A ratio used to value a business by comparing it to similar companies or transactions. Common multiples include EV/EBITDA, EV/Revenue, and Price/Earnings. Al… Read more →
- Vendor Due Diligence
- A due diligence process initiated by the seller before going to market. The seller commissions an independent review of their own business to identify and ad… Read more →
W
- WACC (Weighted Average Cost of Capital)
- The blended rate of return required by all capital providers (debt and equity). WACC is used as the discount rate in DCF valuations. For Swiss SMEs, WACC typ… Read more →
- Wirtepatent (Swiss Hospitality License)
- A cantonal license required to operate a restaurant, bar, or hotel in many Swiss cantons. The Wirtepatent requires passing an exam covering food safety, alco… Read more →
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