Middle Market M: Handbook for Investment Banking and Business Consulting

Glossary

Herein is a glossary of terms and deal slang used in the M&A business of the private capital markets and middle market transactions.1 We have attempted to provide a comprehensive listing of terms generally used, as well as those referenced within this handbook.

10b-5 Rule 10b-5 is an SEC rule that prohibits any act or omission resulting in fraud or intentional deceit (scienter) and relied on by the injured party in connection with the purchase or sale of a security. A 10b-5 representation is a catchall representation in the merger agreement modeled from the SEC rule but without the scienter or reliance requirement, expanding buyer's ability to claim breach of the agreement.2 accelerated depreciation A depreciation method that yields higher depreciation in the early years and less in the later years. accounts payable See payables. accounts receivable See receivables. accredited investor A person or legal entity, such as a company or trust fund, that meets certain net-worth and income qualifications and is considered to be sufficiently sophisticated to make investment decisions in complex situations. Regulation D of the Securities Act of 1933 exempts accredited investors from protection under the Securities Act. Typical qualifications for a person are: $1 million net worth and the two most recent years of annual income equal to or exceeding $200,000 individually or $300,000 with a spouse, and the expectation of the same level of income for the current year; $5 million in ...