The mid-market M&A glossary.

Reported EBITDA restated to reflect the business's true, sustainable earning power — by stripping out one-off items (a legal settlement, a relocation) and normalising owner-specific costs (an above-market founder salary, personal expenses run through the business).

Buyers and their Quality of Earnings advisors scrutinise every "add-back". Aggressive adjustments that don't survive diligence are the most common cause of a valuation re-trade. The discipline of getting these defensible early is core to exit readiness.

A smaller acquisition made by an existing platform company, usually to add capability, geography, or scale. Bolt-ons are typically bought at lower multiples than the platform itself, so each one is immediately accretive — the engine of a buy-and-build strategy.

A strategy of acquiring a platform company and then growing it through a series of bolt-ons. Value is created three ways: multiple arbitrage (buying small at low multiples, exiting large at a higher one), cost synergies, and a more strategically valuable combined entity. It is one of the most reliable value-creation playbooks in mid-market private equity — see our M&A and strategic growth work.

The record of who owns what — every share class, option, warrant, and convertible instrument, with its rights and economics. Cap-table errors (orphan option grants, undocumented promises, unresolved vesting) are the single most frequent cause of delay in mid-market transactions. Cleaning the cap table is an early, unglamorous, high-leverage step in exit preparation.

A provision in a contract — a customer agreement, a lease, a financing facility — that is triggered when ownership of the company changes. It may require the counterparty's consent, allow them to terminate, or reset pricing. A material customer contract with a hostile change-of-control clause can hold an entire deal hostage, which is why these are mapped long before going to market.

The detailed selling document shared with qualified buyers after they sign an NDA. Typically 40–80 pages: business overview, market, financials, management, and the investment thesis. The CIM is where the equity story is made concrete. A well-built CIM pre-empts diligence questions; a weak one invites them.

A price-adjustment mechanism where the final consideration is settled after closing, once a set of accounts dated to completion is prepared and agreed. The opposite approach is the locked box. Completion accounts protect the buyer against value leakage between signing and closing, but they create post-deal negotiation — and occasionally dispute — over working capital and net debt.

How much of revenue depends on a small number of customers — usually expressed as the share held by the top one, five, or ten accounts. High concentration is a discount factor: buyers price in the risk that losing one relationship materially impairs the business. Reducing concentration takes time, which is why it is a priority in any 18–36 month readiness plan.

A valuation method that projects a business's future free cash flows and discounts them back to today using a discount rate — usually the WACC. In mid-market deals DCF is a cross-check rather than the headline: prices are set by EBITDA multiples and what buyers will actually pay, but a DCF tests whether that price makes sense against fundamentals.

The secure online repository where all diligence material — contracts, financials, HR, IP, tax — is shared with buyers under controlled access. "Exit-ready" in practice means a data room that can be opened to a serious buyer on a week's notice. Building it early, and running your own vendor due diligence across it, removes the scramble that kills momentum in a live process.

Part of the purchase price paid after closing, on a fixed schedule, rather than in cash on day one. Unlike an earn-out, it is usually not conditional on performance — but it does leave the seller carrying credit risk on the buyer. A €50m deal with 30% deferred is not the same as €50m in cash at close, and founders should value the two differently.

Two complementary shareholder rights. Drag-along lets a majority force minorities to sell on the same terms, so a buyer can acquire 100%. Tag-along lets minorities join a sale a majority negotiates, on the same terms, so they aren't left stranded. Clarifying these in the cap table before a process avoids a minority holder blocking or delaying a deal.

The buyer's structured investigation of the business before committing — commercial, financial, legal, tax, HR, IT, and ESG. The purpose is to verify the seller's story and surface anything that changes price or terms. Preparation is the whole game: a business that has stress-tested itself first controls the narrative; one that hasn't gets surprised in exclusivity.

A portion of the price paid only if the business hits agreed targets (revenue, EBITDA, milestones) after closing. It bridges a valuation gap between an optimistic seller and a cautious buyer — but it also transfers risk to the seller and ties them to the buyer's stewardship. Earn-out design (metrics, period, control protections) is where good advisors earn their fee; a badly drafted one becomes a multi-year dispute.

A proxy for the cash a business generates from operations, before financing and accounting choices. It is the mid-market's default profit measure because it strips out capital-structure and tax differences, making companies comparable. It is the base that the EBITDA multiple is applied to — which is why how you define and adjust it (see Adjusted EBITDA) matters so much.

The ratio of enterprise value to EBITDA — the single most-used valuation shorthand in the mid-market. A business "trading at 8x" is valued at eight times its EBITDA. Multiples vary by sector, size, growth, and quality; moving from the bottom of a sector's range to the top is exactly what preparation and a competitive process are designed to do. Estimate yours with our multiple estimator.

The value of the whole operating business, independent of how it's financed. In practice: equity value plus net debt. EV is what a multiple is quoted on, because it lets you compare two companies regardless of their borrowing. The headline "the business sold for €120m" almost always refers to enterprise value, not the cash the shareholders received.

The single narrative that explains why a specific buyer should pay a premium for this specific asset — tying product, market position, growth plan, and numbers into something that survives skeptical questioning. Most founder teams believe they have one; most have a list of facts instead. Building a defensible equity story is the first deliverable of any serious readiness engagement.

What the shareholders actually receive — enterprise value minus net debt (and after deal costs and any adjustments). Two businesses can sell for the same enterprise value but deliver very different equity value to their owners, depending on the debt each carries. For a founder, this is the number that matters.

A portion of the price held by a third party (or by the buyer) for a defined period after closing, to cover potential indemnity claims — typically 5–15% for 12–24 months. It protects the buyer if a warranty turns out to be wrong. W&I insurance can reduce or replace the escrow, freeing more cash to the seller at close.

A model where an individual (or small team) raises capital to buy a single established business and run it, rather than start one. ETA buyers are an increasingly active part of the mid-market and lower-mid-market buyer universe — relevant to founders who want a successor-operator rather than a strategic or a fund.

The degree to which the business relies on its founder(s) for revenue, relationships, and decisions. Buyers assume founders leave within 12–24 months of a sale, so a business that is 80% founder-dependent is, to them, one that loses most of its value the day it changes hands. Reducing it — second-layer hires, documented processes, institutionalised relationships — is usually the highest-leverage thing a founder can do before a sale.

A contractual promise by the seller to compensate the buyer for specific, identified risks (a known tax exposure, a live dispute) — distinct from reps & warranties, which cover the unknown. Indemnities, caps, baskets, and survival periods are negotiated line by line in the SPA and can swing the real economics of a deal as much as the headline price.

The annualised rate of return on an investment, accounting for the timing of cash flows. It is the metric private-equity buyers manage to, alongside MOIC. Because IRR is time-sensitive, a quick, clean exit can beat a larger but slower one — which is why a prepared, fast-closing process is worth a premium to a financial buyer.

An acquisition financed largely with debt secured against the target's own cash flows, so the buyer commits relatively little equity. Returns come from paying down that debt, growing EBITDA, and exiting at a stable or higher multiple. The LBO is the structural backbone of most financial-buyer transactions; understanding it tells a seller how a fund thinks about price and management rollover.

A pricing mechanism where the price is fixed using a set of historical accounts at an agreed "locked-box date", with no post-closing adjustment — the buyer simply takes the business as it was at that date, with anti-leakage protections in between. It gives both sides price certainty and a cleaner close than completion accounts, and has become the European mid-market default.

A mostly non-binding document setting out the proposed price and key terms before full diligence and the SPA. It usually grants the buyer a period of exclusivity. Founders often treat the LOI as the finish line; experienced sellers know it is the moment their negotiating leverage peaks — and plan accordingly.

How many times a buyer gets their money back — a 3x MOIC turns €10m invested into €30m returned. Unlike IRR, MOIC ignores time, so the two are read together: IRR rewards speed, MOIC rewards magnitude. Both shape how a financial buyer prices an asset and structures management's rolled-over equity.

The confidentiality agreement a buyer signs before receiving the CIM and entering the data room. It governs what they can do with your information and for how long. Standard, but not trivial — non-solicit and non-compete provisions inside the NDA protect a seller if a "buyer" is really a competitor fishing for information.

Total debt minus cash and cash equivalents. It is the bridge between enterprise value and equity value: the more net debt a business carries, the less of an agreed EV reaches the shareholders. What counts as "debt-like" (pension deficits, deferred consideration, abnormal payables) is itself negotiated — and quietly moves real money.

For recurring-revenue businesses, the share of last year's revenue retained from the same customers this year, after churn but including expansion. Above 100% means the existing base grows on its own — a powerful signal of product stickiness that buyers pay up for. Lifting NRR is one of the clearest, most defensible value levers in a value-creation plan.

A valuation reference built from the multiples paid in comparable, recently completed deals. Because they reflect prices buyers actually paid (including a control premium), precedents are often more persuasive in a negotiation than trading comparables — provided the comps are genuinely similar in sector, size, and timing.

A focused financial diligence exercise that tests how real, recurring, and cash-backed a business's reported earnings are — interrogating revenue recognition, add-backs, working capital, and one-offs. Buyers commission one before they commit; smart sellers commission their own (a vendor QoE) first, so there are no surprises and the EBITDA they market is the EBITDA that survives.

Statements of fact the seller makes about the business in the SPA — that the accounts are true, that there's no undisclosed litigation, that the company owns its IP. If a warranty proves false, the buyer can claim, subject to caps and the escrow. The "disclosure letter" qualifies them; W&I insurance increasingly carries the risk.

The share of their proceeds that a seller — usually the founder or management — reinvests into the buyer's new structure rather than taking in cash. Financial buyers often require meaningful rollover to keep management aligned for the next hold period. It can be a powerful second bite at the apple, or dead money in a deal that disappoints; structuring it well is part of the negotiation.

The binding contract that actually transfers the business. It captures price and mechanism (locked box or completion accounts), reps & warranties, indemnities, conditions, and any earn-out. The headline price agreed in the LOI is only as good as the SPA that follows it — most of the real value is won or lost in these terms.

The extra value created by combining two businesses — cost synergies (removing duplicate overhead) or revenue synergies (cross-selling, pricing, reach). Strategic buyers pay partly for synergies, which is why they can sometimes outbid financial buyers. A seller who can credibly quantify the synergies a specific acquirer would capture holds a real lever in the negotiation.

A valuation reference built from the current market multiples of comparable listed companies. Useful as a market-temperature read, but they reflect minority public-market prices, not the control premium paid in a sale — so they usually sit below precedent transactions and are read alongside them, never alone.

Diligence the seller commissions on their own business before going to market — a third party stress-tests it as a buyer would and reports the soft spots. It lets you fix problems on your own timetable instead of in exclusivity with a binding bid on the table, speeds up the buyer's process, and signals confidence. The pre-market dry run is a defining feature of a well-run exit-readiness programme.

The blended return a business must earn to satisfy all its capital providers — debt and equity — weighted by how much of each it uses. It is the discount rate at the heart of a DCF: a higher WACC means future cash flows are worth less today, and a lower valuation. Small changes in the assumptions behind WACC swing a DCF substantially, which is why it is so often debated.

A policy that covers losses from a breach of reps & warranties, taken out by buyer or seller. It lets a seller walk away with a clean break — less escrow, lower residual liability — while giving the buyer a solvent party to claim against. Now standard on most mid-market deals above a certain size, and a useful way to bridge a risk-allocation gap.

An agreed "normal" level of working capital the business should have at closing. If it delivers more, the seller is paid for the surplus; less, and the price is reduced. The peg is set from historical seasonality and is one of the most negotiated — and most misunderstood — numbers in a deal, because a poorly set peg can quietly erode several percent of the price.