Glossary
IT and M&A terms, briefly explained.
Deals come with a lot of jargon. Here you find the most important terms, as we use them in our mandates.
From Carve-out to Vendor due diligence.
Carve-out
The separation of part of a company that is sold or continues on its own. For IT, this means separating systems, data, contracts and access without disrupting operations.
Change of control
A contract clause that applies when ownership changes. In software and licence agreements it can trigger termination rights or new terms, which is why it belongs in every IT due diligence.
Clean team
A small, ring-fenced group allowed to see sensitive information before closing, for example when buyer and seller are competitors. This makes it possible to plan the separation without crossing antitrust boundaries.
Closing
The completion of the transaction. At closing, ownership and responsibility pass to the buyer and the TSA periods start to run.
Data room
The usually virtual collection of all documents the seller makes available to prospective buyers for review. The IT section covers systems, infrastructure, organisation, contracts, licences, costs and ongoing projects.
Day 1
The first day after closing. By Day 1 the essentials have to work, above all payroll and financial accounting, even if not everything has been separated yet.
Deal breaker
A finding that puts the deal in question or has to be resolved before closing. In an IT due diligence we name deal breakers separately from the other findings.
Hypercare
The phase directly after a system goes live. Start-up issues are fixed quickly before your own team takes over.
Information memorandum
The sales document in which a seller presents the company to prospective buyers. By then at the latest, the IT should be ready for sale, because afterwards findings can hardly be fixed.
IT due diligence
The review of a target’s IT before signing. It assesses applications, infrastructure, IT organisation and processes, security and IT costs, always with a view to the buyer’s plans.
IT fact book
A compact summary of IT figures and information for prospective buyers. It forms the basis for the IT section of the data room.
Perimeter
The exact scope of what is being sold, that is, which entities, sites, employees, systems and contracts are included.
Post-merger integrationPMI
Bringing two companies together after closing. For IT, this covers the target architecture, data migration and the consolidation of duplicate systems.
Reverse TSA
Covers services the seller needs from the buyer after closing, for example when a shared system stays with the divested business.
Signing
The signing of the purchase agreement. Risks that are not known by then can no longer be reflected in the price and the contract.
Standalone
The state in which a separated business runs its operations on its own IT, without services from the seller. Standalone costs are the ongoing costs this involves.
Stranded costs
Costs that remain with the seller after the sale because contracts, licences or infrastructure do not shrink with revenue.
Target
The company or part of a company that a buyer wants to acquire.
TMI+
An optional follow-on mandate after the TSA exit. We implement outstanding improvements, keep reducing IT costs and prepare the IT for the next exit.
TSATransitional service agreement
The agreement under which the seller continues to provide services for a fixed period after closing, such as IT operations, finance or payroll. A TSA usually runs for four to twelve months, longer where the IT is heavily intertwined.
TSA exit
The point from which no TSA service is needed any more because all systems and processes have been taken over or replaced. Our ambition is a TSA exit in under twelve months from closing.
Vendor due diligence
A due diligence commissioned by the seller and made available to prospective buyers. It shortens the process and takes surprises out of the negotiation.
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