In the context of a company audit (due diligence), the data room serves to enable the potential buyer to check the target company's company information. A distinction can be made between a physical data room and an electronic data room.
Data room index
The data room index is a directory that records all documents in the data room.
The DCF method is the abbreviation for the Discounted Cash-Flow method, which is a widely used method of assessing the value of an enterprise (see also Discounted Cash-Flow).
Deal Design is a summarizing term for the way a sales contract is designed. It regulates, for example, whether there is a one-off payment or an earn-out and whether it is an asset deal or a share deal.
A de minimis rule prevents the assertion of relatively low-value claims by agreeing a lower value limit in company purchase contracts, below which a contracting party may not assert any claims under the contract.
The term debenture is the English term for a bond for medium and long-term financing.
The term debt includes all liabilities of a company or person. This includes both financial debt and current liabilities, which are part of net working capital.
Debt capacity is the ability of a target company to bear the debt caused by debt financing in the case of a leveraged buy-out. The corresponding ratio used to measure debt capacity is debt-to-EBITDA.
Debt Free means that a company is free of interest-bearing liabilities.
Debt financed takeover
Debt financed takeovers, or LBOs (Leveraged Buyout), are carried out with the help of debt capital, which may come from bank loans or from bonds issued specifically for this purpose. In practice, there are different types of leveraged buyouts, such as a management buyout (MBO), in which the company is bought by the management, a management buy-in (MBI), in which an external management acquires the target company, an employee buyout (EBO), in which the workforce buys its company, an owner buyout (OBO), in which the co-shareholders acquire the entire company, or an institutional buyout (IBO), in which an investee company acquires the target.
As soon as a purchase agreement has been executed, the company buyer often shifts the loans taken out to finance the purchase price to the acquired company. This is known as debt pushdown and has the advantage that the interest expenses incurred for the loans can be offset against the profits of the acquired company in a tax-reducing manner.
Debt-to-EBITDA is a ratio of a company's debt capital to EBITDA.
In a debt-to-equity swap, a loan claim is exchanged for equity in the debtor company.
Deductible is the name given to the allowance that is deducted from the warranty claims of the company buyer in order to prevent the buyer from looking for the slightest warranty issue.
Deemed knowledge is the knowledge of a person that he or she should have with the help of a certain degree of care. In the context of company acquisitions, it is often a point of dispute whether a warranty-based knowledge of the seller is only present if the seller actually has knowledge or also if deemed knowledge is present.
A default is a situation that constitutes a breach of contract. An event of default is triggered by the addition of further contractually agreed circumstances, such as the fruitless expiry of a deadline.
A default margin is an agreed, increased interest margin (margin), which is applied instead of the agreed interest margin if a default occurs (see also Default).
A defeasance is a method by which a company can reduce its liabilities. In this case, a third party takes over the liabilities in return for a payment in the amount of the discounted repayment amount.
Deferred compensation is used in cases of deferred consideration, e.g. if part of a purchase price is paid only after a certain period of time has elapsed following performance of the contract (deferred purchase price).
Deferred purchase price
A Deffered Purchase Price is that part of the purchase price that the buyer does not have to pay immediately upon closing but only at a later date.
A delisting exists if a listed share withdraws from official or regulated stock exchange trading.
Depreciation refers to the depreciation of tangible assets.
A dilution (or also dilution) is the reduction of a shareholder's percentage share in a company. A typical case where a dilution occurs is when a shareholder does not subscribe to new shares in a capital increase.
Direct public offering
In a direct public offering, the issuer sells its securities directly to investors without the intervention of a bank.
The term Director is particularly common in Anglo-American parlance and refers to a member of the highest performance and supervisory body of a company.
A disclaimer is an exclusion clause or also a disclaimer.
Disclosure is the disclosure of information in the context of annual financial statements or a company acquisition.
The term Disclosure Exhibits refers to the annexes to the company purchase agreement in which information on the company is disclosed. An alternative term is Disclosure Schedules.
In a disclosure letter, the seller of the company discloses information about the company to the buyer. A Disclosure Letter is used to exclude the disclosed information from warranty claims.
The term Disclosure Schedules covers the annexes to the company purchase agreement in which information about the company is disclosed. An alternative term is Disclosure Exhibits.
Discounted Cash Flow
The discounted cash flow is a term for the expected future surplus income of a company, which is discounted to the valuation date.
Discounted Cash Flow method
A discounted cash flow method is used to calculate the value of a company. For this purpose, expected future cash flow surpluses of a company are discounted to a valuation date. Within the discounted cash flow method, a distinction can be made between the gross (entity) approach, the adjusted present value approach and the net (equity) approach.
Non-performing loans are also known as distressed debt.
The term divestiture refers to the sale of a subsidiary or part of a company.
A dormant company is a company without active business activities.
When a parent company merges with its subsidiary, this process is called a downstream merger. The counterpart of a downstream merger is an upstream merger.
DPO is the abbreviation for Direct Public Offering. In a DPO, the issuer sells its securities directly to investors without the intervention of a bank.
A Drag-Along right means that a shareholder willing to sell has the right to force a co-shareholder to sell his shares. The sale is made on the same conditions to the same prospective buyer. A Drag-Along right usually does not exist by law or statute, but is based on a contract. The buyer is thus enabled to take over the entire shares or at least a controlling majority.
Drawdown of a loan under a credit agreement.
A drawdown period is the time frame in which a borrower can draw down the loan granted.
As soon as the shares of a company are listed on at least two stock exchanges, this is called dual listing.
One speaks of a dual track when the seller of a company examines in parallel in the context of a company sale whether the sale via the stock exchange in the context of an initial public offering (Initial Public Offering) or the sale to a single investor is more worthwhile and only at the last moment decides on the option that is more attractive for him.
Due diligence is the investigation and valuation of a company. A distinction is made between different types of due diligence. Examples include general, economic, financial, legal, tax and environmental due diligence.
Due Diligence Report
In a due diligence report, the results that the respective consultants have obtained in the course of the environmental, tax, legal, financial, economic and general due diligence are summarised in writing.