Glossary

MAC

The term MAC is the abbreviated form for Material Adverse Change (see also Material Adverse Change), which refers to the substantially adverse change in the circumstances of the contract.

MAC Clause

The MAC Clause refers to a clause in a company purchase agreement or financing agreement that grants the company buyer or the lending bank the right to refuse to execute the purchase agreement or pay out the loan in the event of a material adverse change (see also Material Adverse Change) or material adverse events. The seller's risk that the MAC clause grants the buyer a right to renegotiate or withdraw from the contract is contained by the fact that a MAC clause usually contains further specific terms or thresholds.

MAE

The term MAE is the abbreviated form for Material Adverse Effect and Material Adverse Event (see also Material Adverse Effect and Material Adverse Event) which in both cases refers to events that have an adverse effect on a contract.

Majority Banks - Majority Lenders

The terms majority banks or majority lenders describe those banks within a banking syndicate that together represent a majority interest in the loan as defined in the loan agreement.

Management Accounts

Management accounts means the financial statements prepared by the management of a company on an ongoing basis, which, unlike annual financial statements, do not have to be audited or certified.

Management buy-in

A management buy-in (MBI) is the acquisition of a company by an external management team in order to take over the management together with or instead of the existing management.

Management Buy-Out

A management buy-out (MBO) is the acquisition of a company by its own management.

Management Discussion and Analysis

The Management Discussion and Analysis (MD&A - the term Operating and Financial Review is also frequently used) refers to the comparison of the current business figures with those of the previous year, as carried out by the management. The Management Discussion and Analysis can be found in every annual report and often also in stock exchange prospectuses.

Management fee

The term management fee is used to refer to the remuneration that a company receives when it conducts business for another company, and the term management fee is also used to refer to the fees that a managing underwriter receives for his management activities in a consortium.

Management Interviews

The discussions that a prospective buyer of a company conducts with the management of the target company in the course of its due diligence (see also Due Diligence) are called Management Interviews.

Management Letter

A management letter is a written statement by the managing directors of a company explaining the accounting policies used in preparing the annual financial statements, relevant transactions and risks requiring provisions. The Management Letter is sent to the company's auditors for the purpose of auditing the annual financial statements.  

Management Participation

Management Participation refers to a social participation of the management of a company in the company for the purpose of giving managers an incentive to increase the value of the company.

Management Presentation

The Management Presentation is an important part of Due Diligence (see also Due Diligence) and describes the presentation of the company and the management in the context of a company sale.

Manager

A manager can generally be described as the head of a business unit. Depending on the context of meaning, managers are also generally referred to as managers.

Managing Underwriter

A Managing Underwriter (or Lead Manager or Global Coordinator) is a syndicate leader of a banking syndicate that accompanies the new issue of a security.

Mandated Lead Arranger

A mandated lead arranger is a synonym for a lead arranger, which refers to a bank that assumes responsibility for structuring the loan commitment and reselling parts of the loan in the case of a syndicated loan.

Mandatory prepayment

Mandatory prepayment refers to a mandatory special repayment (prepayment) by the borrower that is regulated in the loan agreement.

Margin

The premium that the bank charges in addition to the interest assessment base is called margin.

Margin Ratchet

The Margin Ratchet is a mechanism whereby the Margin charged by the bank (see also Margin) changes depending on the development of the financial ratios of the company (which, for example, was bought in a management buy-out). For example, the margin of a syndicated loan is reduced if the financial figures specified in the loan agreement develop positively.

Market abuse

Manipulation of stock market prices, for example by misleading information, is called market abuse.

Market cap

The market cap is a short form of market capitalization (see also Market Capitalization) and describes the market capitalization of a company listed on the stock exchange.

Market capitalization

Market capitalization (Market Cap) is the English term for the market capitalization of a listed company. The market capitalization reflects the current market value of the company and is calculated by multiplying the number of shares by their value.

Market disruption

A market disruption is a term used to describe a market disruption in which banks are no longer able to refinance themselves on a cost-covering basis.

Market maker

The term market maker refers to an exchange participant or securities dealer (such as a bank) that quotes binding buy and sell prices for a security and is prepared to enter into a corresponding contract.

Market Flex Clause

Syndicated loans usually contain a clause (the market-flex clause) that allows the bank, during the resale of the loan, to unilaterally adjust certain loan conditions, such as maturity or interest rate, in order to achieve the resale.

Master Agreement

The Master Agreement is a framework agreement that regulates the essential contractual relationships between parties.

Material Adverse Change

Material Adverse Change (MAC) is the term used to describe a material adverse change in the circumstances of a contract. In the case of a contractually agreed MAC clause (see also MAC Clause), such changes can lead to a contract adjustment or termination.

Material Adverse Effect

A Material Adverse Effect (MAE) is an event that has particularly adverse effects. In company purchase agreements, the term Material Adverse Effect is often used to restrict warranty claims.

Material Adverse Event

A Material Adverse Event (MAE) refers to material adverse circumstances within the scope of a contract. The difference to a Material Adverse Change (see also Material Adverse Change) is that a Material Adverse Event does not require that the circumstances meet the additional criterion of a change in given circumstances. For a material adverse event, the mere existence of the adverse circumstances is sufficient.

Materiality Qualifier

Materiality Qualifier means a limitation on a representation or warranty by the use of the word "material", "substantive" or "materiality" or by an indication of the occurrence or non-occurrence, or the possible occurrence or non-occurrence, of a material impairment or material adverse effect on Buyer, whichever is applicable.

MBI

The MBI is the abbreviation for Management Buy-in, which refers to the acquisition of a company by an external management team to take over the management together with or in place of the existing management.

MBO

The MBO is an abbreviation for a management buy-out in which a company is acquired by own management is acquired.

MD&A

MD&A is the short form of the term Management Discussion and Analysis (see also Management Discussion and Analysis), which refers to the comparison of the current business figures with those of the previous year, as carried out by the management.

Mediation Clause

The Mediation Clause is a clause according to which the parties agree that future disputes will first be settled by mediation. If the mediation was unsuccessful, the parties can go to court.

Memorandum of Understanding

The Memorandum of Understanding is a letter of intent to purchase a company or other corporate transaction, which is issued by the potential buyer and the seller. In contrast to the Letter of Intent (see also Letter of Intent), the Memorandum of Understanding thus takes both sides into account.

Merger

A merger (in common parlance also called merger) describes the amalgamation or fusion of at least two legally independent companies into one economic and legal entity. In the course of a merger, at least one of the two companies loses its legal independence.

Merger clearance

The clearance of a merger project by the antitrust authorities is known as a merger clearance.

Merger control

The competition law consequences of a merger are examined by the Cartel Office. The legally required examination of such business combinations is called merger control.

Mergers and acquisitions

Mergers & Acquisitions (M&A) refers to transactions in which the ownership of one or more companies is transferred or consolidated with other entities.

Mezzanine capital

Mezzanine capital is a hybrid of equity and debt. This type of capital injection is made possible, for example, by dormant holdings, loans with profit participation rights or profit participation certificates.

Mid Cap

Companies with a medium market capitalization are called Mid Cap. The limits vary between EUR 250 million and EUR 1 billion (lower limit) and between EUR 1 billion and EUR 5 billion (upper limit).

Milestones

Milestones are contractually agreed interim targets for the success of an investment, the achievement of which triggers consequences. In practice, such milestone agreements are often found in the context of venture capital investments.

MoU

The MoU is an abbreviation for the Memorandum of Understanding (see also Memorandum of Understanding), which is a declaration of intent made by the potential buyer and the seller to purchase a company or other corporate transaction.

Multiple Valuation

Multiples are used in the calculation of company value and calculate the purchase price of a company by multiplying certain key figures (e.g. EBIT) with a factor customary in the industry.