What is a Founding Partner? Founding partner is typically a term used to designate the shareholder or shareholders of one of the first companies acquired by an equity-backed platform company. The usual procedure is for the platform company to first purchase a large firm with a solid infrastructure and strong management team, with bolt-on acquisitions…
What are Positive Covenants? A positive or affirmative covenant usually prescribes the condition of maintaining the operational well-being and stability of the borrowing party’s business. They are called “positive” debt covenants because of the activities they enlist or the conditions they prescribe. It is because the covenants require the borrowing party to maintain a certain…
What are Non-Financial Covenants? Non-financial covenants are promises or agreements made by the borrowing party that are not financial in nature. The promises are either operational, ownership-related, positive or negative covenants, legal-related, and so on. Non-financial covenants also serve the purpose of a safety net to the lender. They are usually undertaken by a lender…
What is a Seller Representation Agreement? A seller representation agreement, also known as a listing agreement, is an agreement between a seller of real estate and a brokerage firm that provides detailed information on the property being sold. It forms the foundation of negotiations between the seller and the buyer through an agent. It is…
What is a Buyout? A buyout refers to an investment transaction where one party acquires control of a company, either through an outright purchase or by obtaining a controlling equity interest (at least 51% of the company’s voting shares). Usually, a buyout also includes the purchase of the target’s outstanding debt, which is also known…
What are Reps and Warranties? Reps and warranties refer to statements of fact that a seller makes as part of trying to persuade a buyer to purchase their business. Each of the parties in the transaction relies on the other to provide true information about the transaction. The seller provides assurance that the business is…
What is Pooling of Interests? Pooling of interests refers to a technique of recording a merger or acquisition, whereby the assets and liabilities of the two companies are summed together and then netted. Historically, firms could adopt either of two approaches to accounting for consolidations or amalgamations – the purchase method and pooling of interests….
What are Dead Deals? Dead deals refer to merger and acquisition deals that go through due diligence but do not close, due to various reasons related to either the seller or the buyer. When deals fail to close, various costs are incurred, both direct and indirect. These are referred to as dead deal costs. The…
What is a Deal Team? What is a deal team? Ownership transactions such as ESOPs, M&A, and recapitalizations are usually complex transactions that require the knowledge and skills of a wide range of professionals. A deal team needs to get all individual players contributing in the right measure and at the right time during the…
What is a Deal Sheet? A deal sheet refers to a process record of the work experience of an entrepreneur or employee in past financial investment deals. The documentation of deals made by an individual in the deal sheet provides proof of suitability for working on similar projects. Most people who prepare deal sheets are…
