All M&A glossary terms
Full list in alphabetical order. Search by name or slug to jump to a term.
29 terms
- Business valuation
Process and methods to estimate the economic value of a company.
- Carve-out
Sale of part of a business; operational and legal separation.
- CIM (Confidential Information Memorandum)
Confidential sales document presenting the company to buyers.
- COFECE
Mexican antitrust authority; thresholds and notification of concentrations in M&A.
- Consideration structure
How the deal is paid: cash, stock, earn-out.
- Customer concentration
Risk when few customers generate most of revenue.
- Data room
Virtual or physical space with documents for diligence.
- DCF (Discounted Cash Flow)
When to use it for SMEs
- DSCR (Debt Service Coverage Ratio)
Debt repayment capacity; key ratio for lenders.
- Due diligence
Deep review of the business by the buyer before closing.
- Earn-out
Part of the price paid after closing if targets are met.
- EBITDA
Operating profitability measure before interest and taxes.
- EBITDA multiple
Real ranges in the Mexican market
- Foreign direct investment
Capital from abroad; relevant for sectors and for buyer interest in Mexican SMEs.
- IOI (Indication of Interest)
Non-binding indication of interest and price range.
- LIE (Foreign Investment Law)
Law regulating foreign investment in Mexico; restricted sectors and when authorization is required.
- LOI (Letter of Intent)
Letter of intent that sets key deal terms.
- M&A (Mergers and Acquisitions)
Mergers and acquisitions; buying and selling companies.
- National Foreign Investment Commission
Body that reviews and may authorize foreign investment in sectors restricted under the LIE.
- NDA (Non-Disclosure Agreement)
Confidentiality agreement before sharing information.
- Normalized EBITDA
Most common adjustments in Mexican SMEs
- Representations and warranties
Contractual statements by the seller about the business.
- Rules of origin
Criteria that define a product's origin for preferential tariff treatment under USMCA.
- Seller note
Tranche of the price the buyer pays over time as debt to the seller; fixed obligation, not contingent.
- Teaser
Short anonymous summary to attract buyer interest.
- Term sheet
Document with the main terms of the purchase agreement.
- TSA (Transition Services Agreement)
Transition services agreement after closing.
- USMCA
Trade agreement between Mexico, US and Canada; relevant for nearshoring.
- Working capital
Resources needed to run the business day to day.