18 c DEAL STRUCTURING AND FINANCIAL STRATEGIES
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What is deal structuring in the context of mergers and acquisitions?
Deal structuring refers to the process of designing the terms, conditions, and financial arrangements of an M&A transaction, including payment mode, consideration type, legal form, and risk allocation between parties.
What is a definitive agreement in M&A deal structuring?
Legally binding contract finalizing all terms of the transaction.
What are the primary forms of consideration used in M&A deal structuring?
The primary forms of consideration include cash payment, stock-for-stock exchange, a combination of cash and stock, earnouts, debt instruments, and assumption of liabilities.
What is a letter of intent (LOI) in M&A transactions?
Non-binding document outlining key terms before final agreement.
What is an earnout arrangement in M&A deal structuring?
An earnout is a contingent payment mechanism where a portion of the acquisition price is paid to the seller based on the target company achieving specified future financial milestones such as revenue or EBITDA targets.
What is a Special Purpose Acquisition Company (SPAC) in deal structuring?
Blank-check company formed to raise capital for acquiring another business.
What is the difference between an asset purchase and a stock purchase in deal structuring?
In an asset purchase, the buyer acquires specific assets and liabilities of the target, while in a stock purchase, the buyer acquires the entire entity including all assets, liabilities, and contingent obligations by purchasing the shares.
What is a vendor due diligence report in M&A?
Seller-commissioned report assessing business before buyer's own due diligence.
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