Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Home Glossary Financial Engineering

Bad Faith Absentee Owner W-2 Wage S Corporation Closing

APA = Asset purchase agreement

CA = Confidentiality agreement

CIM = Confidential information memorandum

COGS = Cost of goods sold

DBA = Doing business as

DCF = Discounted cash flow

DPA = Definitive purchase agreement

EBITDA = Earnings before interest, taxes, depreciation, and amortization

ESOP = Employee stock ownership plan

FMV = Fair market value

GAAP = Generally accepted accounting principles

IP = Intellectual property

IRR = Internal rate of return

LOI = Letter of intent

MAC = Material adverse change

MBI = Management Buy-In

MBO = Management Buyout

NDA = Non-disclosure agreement

PE = Private equity

PEG = Private equity group

ROI = Return on investment

SDE = Seller’s discretionary earnings

SPA = Stock purchase agreement

View All

Financial Engineering

Definition

Financial structuring of a company or particular transaction to increase returns.

Tips

Financial engineering is commonly used by private equity groups (PEGs) in larger middle-market transactions ($500 million and up); however, it is not commonly used for smaller middle-market transactions (less than $100 million to $500 million).

Financial Engineering

Definition

See Also

Tips