Glossary of capital transactions
The vocabulary of capital transactions, defined simply. Each definition links to the guide that covers the transaction.
Active holding company · BADR and BPR · Court-approved sale plan · Data room · DIFC or ADGM foundation · Dividend recapitalisation · Dual-track · Dutreil pact · Earn-out · Enterprise value and equity value · Family buy-out · Holding contribution · LBO · Letter of intent · MBO · OBO · Pre-pack sale · Rollover · Sale and leaseback · Shareholders' agreement · SPAC and de-SPAC · Vendor due diligence · Vendor loan · Warranties and indemnities
- Active holding company
- Holding company that takes an active part in running its subsidiaries and provides them with services. In France this status conditions several regimes, including the Dutreil pact, and must be shown by facts. Read the guide
- BADR and BPR (UK)
- Business Asset Disposal Relief cuts capital gains tax to 18% on up to £1m of lifetime gains on selling a trading business. Business Property Relief exempts business shares from inheritance tax, in full up to £2.5m since April 2026 and at 50% above.
- Court-approved sale plan (France)
- Purchase of all or part of a business in French insolvency proceedings, chosen by the court. The buyer takes the assets and staff it selects, without the debts, with exceptions. Read the guide
- Data room
- Secure space, usually online, where the seller makes the company's documents available to buyers: accounts, contracts, disputes, HR. Its quality affects the length and the price of the deal. Read the guide
- DIFC or ADGM foundation
- Legal entity of the Dubai (DIFC) and Abu Dhabi (ADGM) financial centres, used by families to hold and pass on assets under written rules, without shareholders. Read the guide
- Dividend recapitalisation
- Raising new debt to pay an exceptional dividend to shareholders. The owner takes out cash without selling, at the cost of higher company debt. Read the guide
- Dual-track
- Preparing an IPO and a private sale at the same time. The owner keeps the choice until the last moment and is not stuck if the market window closes. Read the guide
- Dutreil pact (France)
- French regime that exempts 75% of the value of shares in an operating company from gift or inheritance duties, in exchange for holding commitments (2 years collective, 6 years individual since 2026) and management conditions. Read the guide
- Earn-out
- Part of the sale price paid later, if the business meets targets set in the contract (revenue, profit). It bridges seller and buyer expectations but leaves part of the price uncertain.
- Enterprise value and equity value
- Enterprise value measures the business, regardless of how it is financed. Equity value, what the shareholder receives, is enterprise value minus net debt and negotiated adjustments. Read the guide
- Family buy-out (FBO)
- Purchase of the family business by one or more family members through a holding company that takes on debt, often combined with a gift and a Dutreil pact in France to reduce duties. Read the guide
- Holding contribution (France, article 150-0 B ter)
- Contribution of a company's shares to a holding company controlled by the owner, before the holding sells them. The contribution gain is deferred; if the holding sells within 3 years, it must reinvest at least 70% of the price in an economic activity within 3 years, under the rules of the 2026 finance law. Read the guide
- LBO (leveraged buy-out)
- Acquisition of a company financed partly by debt carried by an acquisition holding company, repaid from the acquired company's dividends. Read the guide
- Letter of intent (LOI)
- Document in which a buyer sets out the proposed price, structure and main conditions of a deal, before due diligence. It often opens a period of exclusivity. Read the guide
- MBO (management buy-out)
- Purchase of a company by its management team, usually with bank financing and sometimes a private equity fund or a vendor loan. Read the guide
- OBO (owner buy-out)
- Transaction in which the owner sells the company to a holding company they control, financed by debt and often a minority investor. The owner takes out part of the value while keeping control. Read the guide
- Pre-pack sale
- Sale of a business in difficulty prepared confidentially before formal proceedings, then approved or completed quickly once they open: prepack cession in France, pre-pack administration in the UK. It preserves the value of the activity. Read the guide
- Rollover (reinvestment)
- Part of the sale price the seller reinvests in the buyer's structure. It aligns seller and buyer and lets the seller share in future value creation. Read the guide
- Sale and leaseback
- Sale of an asset, usually an operating property, to an investor who immediately leases it back to the business. The business turns the asset's value into cash and keeps using it for a rent. Read the guide
- SPAC and de-SPAC
- Listed company with no operations, created to merge with a private company. The merger (de-SPAC) lets the company list, on Nasdaq for example, without a traditional IPO. Read the guide
- Vendor due diligence (VDD)
- Financial, and sometimes legal or tax, review commissioned by the seller before the sale and given to buyers. It anticipates their questions and reduces the risk of price renegotiation. Read the guide
- Vendor loan
- Part of the price the seller agrees to receive later, as a loan to the buyer. Common in management and family buy-outs, it reduces the bank debt required. Read the guide
- Warranties and indemnities
- Seller's commitments to compensate the buyer if a liability from before the sale appears afterwards (tax reassessment, dispute). They are limited by a cap, a threshold and a duration, and can be insured (W&I insurance). Read the guide
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