Search Fund Jargon Translator
Clear, plain-English definitions of ETA and dealmaking terms, with practical notes and examples.
Representations and Warranties (R&W)
Legal statements of fact made by the seller in the purchase agreement about the condition of the business. A breach can lead to financial claims by the buyer.
Non-Disclosure Agreement (NDA)
A legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to.
Exclusivity Period
A legally binding provision in an LOI where the seller agrees not to solicit or negotiate with any other potential buyers for a specified period.
Indemnification
A contractual obligation of one party (the seller) to compensate the other party (the buyer) for specified losses or damages that may arise from a breach of representations and warranties.
Escrow
A portion of the purchase price held by a neutral third party (an escrow agent) for a specified period after closing to cover potential indemnification claims.
Reps and Warranties Insurance (RWI)
An insurance policy that covers losses arising from breaches of the seller's representations and warranties in an acquisition agreement.
Transition Services Agreement (TSA)
An agreement where the seller agrees to provide certain services (e.g., accounting, IT, HR) to the buyer for a specified period after closing to ensure a smooth transition.