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Glossary of Terms

Set out below is a Glossary of standard transactional terminology for private equity and corporate finance transactions. Use the filter menu if you are looking for a specific term, or to navigate the Glossary alphabetically.

MBI 'Management buy-in'A new management team, usually backed by investors, take a majority stake in the company. This can take place when there are succession issues such as within a family business, or if the incumbent management team lack the expertise or funding to buy-out the company.

MBO 'Management buy-out'Some or all of the existing management team, often with the support of a new investor, buys control of the business form the existing shareholders. This is seen as less risky for private equity investment as the management team are already established and know the business.

MergerA transaction which merges two companies into one, a share for share exchange. Often a merger is actually an acquisition. If the swap is not on equal terms then this is an acquisition.

Mezzanine financingThis type of financing is used to bridge the gap between the secured debt a company can support, the available equity and the purchase price. As mezzanine financing is higher risk that senior debt the interest charged is higher. It also often carries warrants to subscribe to ordinary shares.

MOUMemorandum of Understanding