PEINVEST
A contractual provision in which the seller of a business receives additional future payments contingent on the company achieving specified performance targets after the acquisition. Earnouts help bridge valuation gaps between buyers and sellers.
The thorough investigation and analysis of a target company conducted before completing an acquisition. Due diligence typically covers financial, legal, commercial, operational, and environmental aspects to identify risks and validate the investment thesis.
A portion of the purchase price held by a neutral third party for a specified period after closing to cover potential indemnification claims. Escrow accounts protect the buyer against breaches of representations and warranties discovered after the transaction closes.
A non-binding document outlining the key terms and conditions of a proposed investment or acquisition. Term sheets cover valuation, governance rights, liquidation preferences, and other material deal terms, serving as the basis for definitive legal documentation.