Legal due diligence is the systematic legal investigation of a target company before a transaction—typically acquisition, investment, or financing—to identify legal risks, validate seller representations, and inform deal terms and pricing.

A working capital adjustment is the post-closing purchase-price reconciliation mechanism in M&A transactions where the final purchase price is adjusted up or down based on the difference between the target company’s actual working capital at closing and a pre-agreed reference level (“target worki…

A data room is a curated repository of documents made available to specified parties for review during a transaction’s due diligence phase.

A Disclosure Letter (also called Disclosure Schedule or Schedule of Exceptions) is a document accompanying an M&A purchase agreement where the seller discloses specific exceptions to the representations and warranties given in the main agreement.

A Material Adverse Change (MAC) clause (also “Material Adverse Effect” or MAE) is a contractual provision allowing a party — typically the buyer in an M&A transaction or a lender in a credit agreement — to terminate the transaction or refuse to close if a defined adverse event affects the target …

Representations and Warranties (R&W) Insurance, also called Warranty and Indemnity (W&I) Insurance in Europe, is an insurance product that covers losses arising from breaches of representations and warranties in M&A transactions.

An escrow is a third-party-held account, asset, or instrument deposited as security for the performance of contractual obligations — typically released to the intended beneficiary only upon the occurrence of specified conditions or the lapse of a defined period.

An earn-out is a deferred-payment mechanism in an M&A transaction in which a portion of the purchase price is paid to the seller(s) only if defined post-closing performance milestones are achieved — typically revenue, EBITDA, customer-retention, product-launch, or strategic-integration targets me…

An Asset Purchase Agreement (APA) is a contract structuring an acquisition where the buyer purchases specific assets (and assumes selected liabilities) of the target company, rather than acquiring the target’s shares.

A Letter of Intent (LOI) (sometimes “Memorandum of Understanding” or “Term Sheet” in M&A context) is a preliminary written document — typically 3–10 pages — outlining the principal commercial terms of a proposed M&A transaction and signaling the parties’ good-faith intent to negotiate definitive …