Search Fund Jargon Translator
Clear, plain-English definitions of ETA and dealmaking terms, with practical notes and examples.
Data Room
A secure online repository where a seller stores and shares confidential documents with prospective buyers during the due diligence process.
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.
Add-backs
Expenses that are added back to a company's net income or EBITDA to arrive at an adjusted figure that better represents its true, ongoing profitability.
Capital Expenditures (CapEx)
Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment.
Free Cash Flow (FCF)
The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.
Platform Acquisition
The initial acquisition made by a private equity firm or search funder, with the intention of using it as a base for future add-on acquisitions in the same industry.
Add-on Acquisition
A smaller acquisition made by a platform company to expand its geographic reach, product offerings, or capabilities.