Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Renewable Energy - M&A Terms > Renewable Energy - M&A Terms (English) > Flashcards

Renewable Energy - M&A Terms (English) Flashcards

1
Q

What is antitrust?

A

Legislation aimed at monopolisation and anti-competitive practices.
Trust: A group of companies who team up to limit competition and control price formation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is rTSA?

A

Reserve transactional service agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Models for reinvestment

A

1) Cash
2) Daylight facility
3) Partial transfer/payment
4) Loan note -> Non-cash contribution
5) Loan note -> Debt conversion.

State pros and cons.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is Texas Shoot Out / Russian Roulette?

A

A offers to sell his share of a company to B. If B declines to purchase A’s share, B has to offer A the opportunity to buy B’s share at the same price.

Often used in partnership exits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is IRR?

A

Internal rate of return.
A metric used to calculate the yearly return on a (potential) investment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is LOI and what is it used for?
What is relevant to regulate in the LOI?

A

Letter of intent (LOI) documents a potential buyers intent to buy the company.

LOI is used, i.a., i) to convince the bank to finance the transaction, ii) to show other potential buyers that there are other interested buyers and iii) to support the sales price for the company

LOI often regulates: background and purpose for the transaction, the estimated purchase price, transaction structure, conditions and due diligence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is de minimis, basket and cap?

A

De minimis refers to the minimum requirements for when a claim can be made.

Basket can be compared to own risk. The claims must collectively exceed the basket to be relevant.
Basking: From there
Tipping: TIp over when a certain amount is reached.

Cap referes to the maximum claim to be made under the garanties.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is an NBI Report?

A

A report made by the broker that state offers from different insurance companies.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is leveraged buyout?

A

Leveraged buyout/LBO refers to private equity funds’ acquisition of another company using primarily borrowed money (leverage).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are drag-along rights and tag-along obligations

A

Drag-along refers to a clause in a agreement that enables the majority shareholder(s) to force minority shareholder(s) to sell their shares.

Tag-along refers to a clause in a agreement that enables the minority shareholder(s) to sell their shares if the majority shareholder(s) sell theirs. This right coutnerbalances the drag-along obligation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is price versus value

A

Price is what you pay and value is what you get

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is condition precedent

A

Condition precedent (CP) refers to a condition, event or state that must complied with before closing for the contract to be considered to be in effect.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is a golden parachute?

A

Compensation to a director/key employee that had to be dismissed or lost responsibility in connection with an acquisition.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

No multiple effect (SPA limitation)?

A

SPA limitation of liability where the loss of a seller must be summed up pound for pound without without regards to method for calculation of the purchase price.
Seller: The limitation of the purchase price for the buyer is irrelevant for seller. The loss must be summed up on the basis of the loss of the company and not the loss on the shares.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is working capital?

A

The capital needed to maintain the day-to-day running of the company, including debtor, creditors and stock.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is an underwrite and what role does this have?

A

The lawyer of the insurance company who examines the due diligence-reports and hold these against the guarantees to assess the coverage.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the effect of a specific indemnity?

A

The effect of a specific indemnity is to hold the issuer liable without fault and indemnify the other part.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is a cartel?

A

An unlawful agreement between competing companies what limits competition in the market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

How do you structure a due diligence finding?

A

1) What is the problem?
2) What is the consequence?
3) How do we solve or manage the risk?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is non-disparagement?

A

A clause that states that you won’t say anything negative about a company, its products, services or leaders.

21
Q

What is the Magic Circle?

A

An unformal term of the five most prestigious law firms in the UK: Allen and Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May

22
Q

What are the threshold limits for duty of notification when merging.

A

i) The merged companies must have a turnover of total DKKm 900 in Denmark and at least DKKm 100 for each company.

ii) At least DKKm 3.800 in turnover for one of the companies in Denmark and the other of DKKm 3.000 worldwide.

23
Q

What is the purpose of Bring Down of Disclosures?

A

The purpose is to reconfirm the guarantees before closing to make sure no breach has been performed between signing and closing.

24
Q

What is money multiple?

A

Multiple of Money (MoM) compare the amount a sponsor receives/withdraws in connection with exit with the amount a sponsor has contributed.

25
Q

List corporate finance companies

A

EY, Goldman Sachs, Deloitte, Rothschild, KPMG, Nordea, PWC, Grant Thorton, FIH Partners, Atrium Partners, Clearwater, Carlsquare, Danske Bank, ABG Sundal Collier, Carnegie and Nordic M&A

26
Q

What is a broker and what role does it have?

A

A broker/intermediary/mediate between a buyer and the insurance market.

27
Q

What is a sponsor (financial)?

A

A private equity fund is managed by a private equity firm - often called a private equity sponsor or financial sponsor. The fund is the investment or capital used to buy a controlling interest in a private company, while the sponsor is responsible for operating the fund.

28
Q

Locked box vs closing account

A

The key difference is when the profit is transferred. With regards to locked box, the profit is transferred per locked box date whereas with regards to closing accounts the profit is transferred per closing on the basis of a at the current stage-balance.

29
Q

Hell or high water (FDI+ merger control)

A

An absolute commitment of a party to perform an action with no contractual defense.

30
Q

What is enterprise value?

A

The value of a company on a debt-free basis; the value of the activity.

31
Q

What is the industry standard for de minimis, basket og cap

A

Approx. 0,1%, approx 1%, between15-35%

32
Q

What are the rates for corporate tax and tax on capital gains in Denmark?

A

Corporate tax: 22%
Tax on capital gains: 27% on the first DKK 61.000 and 42% on amounts exceeding this (2024).

33
Q

What is cash flow?

A

A statement of a company’s in- and outgoing payments.
An indicator of the liquidity-level.

34
Q

What is new breach?

A

New breach refers to breaches on guarantees after signing that e.g. is discovered in connection with bring down of disclosures.

35
Q

What is equity value?

A

The value of shares; i.e. value of assets deducted debt.

36
Q

What is the value of a company?

A

The capital value of the future erarnings, i.e. the expected future cash flows discounted a rate taking valeur of money and risk into account.

37
Q

What is deadlock?

A

A situation where the parties cannot agree on a certain subject as no other negotiating mechanism than consensus is agreed.

38
Q

What is sandbagging/anti-sandbagging

A

A sandbagging clause states that the knowledge of a buyer does not limit a potential claim; i.e. allows a buyer to sue the seller after closing for a representation and warranty that the buyer knew about prior to closing.
Anti-sandbagging prohibits sandbagging.

39
Q

Earn-out: Periodic payment (tax assessment act (Ligningsloven) § 12b)

A

Conditions:
1) Payment fall dure in later tax-/income year
2) To or more regulations

Effect:
Companies: 22% corporate tax for seller if final earn-out exceeds cap value.
Individuals (employees): Tax on capital gains in the income year.

40
Q

What is i) competition/non-competition clause, ii) non-solicitation clause and iii) no-hire clause?

A

i) Clause prohibiting an employee from working or starting a competing company.
Maximum of 12 months for salary earners.
ii) Clause regulating that an employee in a certain period after resignation/exit may not work or have business contact with the clients of the company.
12 months
iii) Clause that a employer enteres into with other employers to hinder an employer’s hire.
Invalid, except for acquisitions, where they are valid up to 6 months.

41
Q

What is bootstrapping?

A

Bootstrapping is the start-up and operation of a company exclusively with equity capital without external financing

42
Q

Valuation methods

A

1) Market based: EV/EBITDA & P/E
2) Income-based: Value depends on the company’s ability to generate cash flow
3) Asset-based: Assets plus goodwill

43
Q

What is clean team?

A

Separate room in virtual data room (VDR) to which competition-sensitive information, to which only a limited circle of people without advisers have access to.
Purpose: Ensures that competition-sensitive information does now flow to competing companies and acts as a defence against authorities.

44
Q

What is GoO?

A

Guarantees of Origin (GoO) (Danish: Oprindelsesgarantier). Certificate that manufacturer receives pr. MW renewable energy. It has a value and can be traded.

45
Q

What is CoD?

A

Commercial operation date (CoD) refers to the day a project is put into operation.

46
Q

What is ISCC/Red certification?

A

A certification-system under RED II showing your compliance with the conditions in the EU-regulations.
Both electricity, gas and biomass.
The GoO will get a higher value.

47
Q

What is a no-shop clause?

A

An exclusivity term preventing seller from taking in tenders and/or negotiating competing offers.

48
Q

Soft staple versus hard staple (W&I)

A

Hard: Seller engages an insurance company and underwrites relatively thorough; VDD.
Soft: The marketing work is done but otherwise it is open.

49
Q

What is a convertible instrument of debt (Danish: Konvertibelt gældsbrev)?

A

An instrument of debt which gives the lender the right to have the loan repaid in cash or to convert the loan into shares.

Renewable Energy - M&A Terms (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions