What is Reverse Takeover (RTO)? A Reverse Takeover (RTO), often known as a reverse IPO, is the process in which a small private company goes public by acquiring a larger, already publicly listed company. The practice is contrary to the norm because the smaller company is taking over the larger company – thus, the merger…
What is BATNA? BATNA is an acronym that stands for Best Alternative To a Negotiated Agreement. It is defined as the most advantageous alternative that a negotiating party can take if negotiations fail and an agreement cannot be made. In other words, a party’s BATNA is what a party’s alternative is if negotiations are unsuccessful….
What is an Independent Sponsor? An independent sponsor, also referred to as a fundless sponsor, is an individual or capital group seeking to acquire a company, who does not have the equity financing needed for the transaction in advance. The independent sponsor recognizes a target company and then seeks an investor that can provide equity…
What is a Smart Contract? A smart contract is a self-executing contract whose terms of the agreement between the contract’s counterparties are embedded into lines of code. Essentially, a smart contract is a digital version of the standard paper contract that automatically verifies fulfillment and enforces and performs the terms of the contract. The concept of…
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…
