Glossary

Table Of Contents
1 DEAL CLASSIFICATIONS – DEAL TYPE ......................................................................................................... 1
1.1 ACQUISITION ............................................................................................................................................. 1
1.2 MERGER .................................................................................................................................................... 1
1.3 DEMERGER ................................................................................................................................................ 1
1.4 INSTITUTIONAL BUY-OUT (IBO) ................................................................................................................. 1
1.5 MANAGEMENT BUY-OUT (MBO) .............................................................................................................. 1
1.6 MANAGEMENT BUY-IN (MBI).................................................................................................................... 2
1.7 MANAGEMENT BUY-IN/BUY-OUT (BIMBO) .............................................................................................. 2
1.8 MINORITY STAKES ..................................................................................................................................... 2
1.9 JOINT VENTURE ......................................................................................................................................... 2
1.10 CAPITAL MARKETS DEALS ...................................................................................................................... 2
1.10.1 INITIAL PUBLIC OFFERING .............................................................................................................. 2
1.10.2 PLANNED IPO ................................................................................................................................. 2
1.10.3 SHARE BUY BACK ............................................................................................................................ 3
2 DEAL DATES ............................................................................................................................................... 4
2.1 RUMOUR DATE ......................................................................................................................................... 4
2.2 ANNOUNCED DATE ................................................................................................................................... 4
2.3 COMPLETION DATE ................................................................................................................................... 4
2.4 EXPECTED COMPLETION DATE .................................................................................................................. 4
2.5 WITHDRAWN DATE ................................................................................................................................... 4
2.6 POSTPONED DATE ..................................................................................................................................... 4
2.7 NON-SPECIFIC COMPLETION DATES.......................................................................................................... 4
3 DEAL STATUS ............................................................................................................................................. 6
3.1 RUMOUR - WITHDRAWN .......................................................................................................................... 6
3.2 RUMOUR - EXPIRED .................................................................................................................................. 6
3.3 RUMOUR - INFORMAL OFFER REPORTED.................................................................................................. 6
3.4 LOOKING TO BUY ...................................................................................................................................... 6
3.5 LOOKING TO SELL ...................................................................................................................................... 6
3.6 LOOKING FOR FUNDING ............................................................................................................................ 6
3.7 PENDING SHAREHOLDER APPROVAL ........................................................................................................ 6
3.8 PENDING REGULATORY APPROVAL .......................................................................................................... 6
3.9 PENDING ................................................................................................................................................... 7
3.10 UNCONDITIONAL ................................................................................................................................... 7
3.11 WITHDRAWN ......................................................................................................................................... 7
3.12 POSTPONED........................................................................................................................................... 7
3.13 ANNOUNCEMENT.................................................................................................................................. 7
4 SUB DEAL TYPES ........................................................................................................................................ 8
4.1 BUILD UP ................................................................................................................................................... 8
4.2 CAPITAL POOL ........................................................................................................................................... 8
4.3 CONTESTED BID......................................................................................................................................... 8
4.4 DEBT & CASH FREE BASIS .......................................................................................................................... 8
4.5 DEMERGER ................................................................................................................................................ 8
4.6 EXIT ........................................................................................................................................................... 8
4.7 EXIT – PARTIAL .......................................................................................................................................... 8
4.8 EXIT – NEW STAKE ..................................................................................................................................... 8
4.9 HOSTILE BID .............................................................................................................................................. 9
4.10 HOSTILE INITIALLY BECAME RECOMMENDED ....................................................................................... 9
4.11 LEVERAGED BUY OUT ............................................................................................................................ 9
4.12 MULTIPLE BIDS ...................................................................................................................................... 9
4.13 NATIONALISATION ................................................................................................................................ 9
4.14 PIPE........................................................................................................................................................ 9

ii
 Table Of Contents

4.15 PRIVATISATION ...................................................................................................................................... 9

4.16 PUBLIC TAKEOVER ................................................................................................................................. 9
4.17 RECOMMENDED BID ........................................................................................................................... 10
4.18 RECOMMENDED INITIALLY BECAME HOSTILE ..................................................................................... 10
4.19 RESTRUCTURING ................................................................................................................................. 10
4.20 REVERSE TAKE-OVER ........................................................................................................................... 10
4.21 SCHEME OF ARRANGEMENT ............................................................................................................... 10
4.22 TENDER OFFER..................................................................................................................................... 10
4.23 UNSOLICITED BID ................................................................................................................................. 10
4.24 SECONDARY LISTING ........................................................................................................................... 11
4.25 START UP ............................................................................................................................................. 11
5 FURTHER DEAL CLASSIFICATION .............................................................................................................. 12
5.1 ASSET-BASED FINANCE ........................................................................................................................... 12
5.2 RECEIVERSHIP DEALS .............................................................................................................................. 12
6 METHODS OF PAYMENT .......................................................................................................................... 13
6.1 CASH ....................................................................................................................................................... 13
6.2 SHARES .................................................................................................................................................... 13
6.3 LOAN NOTES ........................................................................................................................................... 13
6.4 OTHER ..................................................................................................................................................... 13
6.5 DEBT ........................................................................................................................................................ 13
6.6 CASH ASSUMED ...................................................................................................................................... 13
6.7 DEFERRED PAYMENT .............................................................................................................................. 14
6.8 EARN OUT ............................................................................................................................................... 14
7 DEAL FINANCING ..................................................................................................................................... 15
7.1 ANGEL INVESTMENT ............................................................................................................................... 15
7.2 CAPITAL INCREASE .................................................................................................................................. 15
7.3 CAPITAL INCREASE – CONVERTED DEBT .................................................................................................. 15
7.4 CAPITAL INCREASE – CONVERTIBLE BOND ISSUE .................................................................................... 15
7.5 CAPITAL INCREASE – CONVERTIBLE LOAN NOTES ................................................................................... 15
7.6 CAPITAL INCREASE – PUBLIC OFFER ........................................................................................................ 15
7.7 CAPITAL INCREASE – PLACING ................................................................................................................. 16
7.8 CAPITAL INCREASE – PRIVATE PLACING .................................................................................................. 16
7.9 CAPITAL INCREASE – RIGHTS ISSUE ......................................................................................................... 16
7.10 CAPITAL INCREASE – VENDOR PLACING .............................................................................................. 16
7.11 CONVERTED DEBT ............................................................................................................................... 16
7.12 CORPORATE VENTURING..................................................................................................................... 17
7.13 DEVELOPMENT CAPITAL ...................................................................................................................... 17
7.14 DEVELOPMENT CAPITAL - SEED ........................................................................................................... 17
7.15 DEVELOPMENT CAPITAL –1ST ROUND/8TH ROUND ........................................................................... 17
7.16 LEVERAGED BUY OUT .......................................................................................................................... 17
7.17 MEZZANINE ......................................................................................................................................... 17
7.18 NEW BANK FACILITIES ......................................................................................................................... 17
7.19 PRIVATE EQUITY .................................................................................................................................. 18
7.20 VENTURE CAPITAL ............................................................................................................................... 18

iii
1 DEAL CLASSIFICATIONS – DEAL TYPE
1.1 ACQUISITION
Any deal where the acquirer ends up with 50% or more of the equity of the Target is coded as an
Acquisition as the Acquiror now has control of the Target. Even if the acquired stake is very small;
if the final stake is 50% or above the deal is classed as an Acquisition.

Acquisitions listed on Zeohyr include any of the following scenarios:

Acquisition X% - A controlling stake (X%) in the Target has been acquired (i.e. 50% or over).
Acquisition majority stake - The exact stake acquired has not been disclosed but the resulting
stake is known to be 50% or more.
Acquisition remaining X% - The Bidder has acquired the X% of the Target's shares that it does
not already own, bringing it's total stake to 100%.

Acquisition stake increased from X% to Y% - The Bidder has increased its stake from X% to
Y%, where Y is equal to or greater than 50%.
Acquisition stake increased to X% - The Bidder has increased its stake in the Target from an
unknown figure to X%, where X is over 50%.

1.2 MERGER
A true Merger is quite rare and many acquisitions are described as mergers. In a Merger, there is a
one-for-one share swap for shares in the new company and the deal involves a ‘merging of equals’.
If the swap is not on equal terms, the deal would be coded as an Acquisition. However, in a true
Merger, the original companies are entered into the deal record as the Acquiror and the Target (in
no particular order). In the case of a 3- (or more) way merger, multiple companies can be entered
in both Acquiror and Target fields. Where a newco has been used, the newco is added as the
Acquiror and the newly merged company as the Target.

The newly merged company name would be added to the comments. Mergers do often occur as
‘partnerships’ carried out by institutions including law firms and accountancy firms.

1.3 DEMERGER
A Demerger occurs when a newly independent entity is launched to trade autonomously but is still
owned by the Vendor’s shareholders. The Vendor company separates a division from itself which
forms the newly demerged company. The division has not been sold and as a result, the new
company is still owned by the Vendor’s shareholders.

1.4 INSTITUTIONAL BUY-OUT (IBO)

This is an acquisition where a Private Equity firm has taken a 50% stake or more in the Target
company, or is the parent of the Acquiror. The acquisition often takes place through a ‘new
company’ (newco) or an acquisition vehicle. Often the Target company’s management will take a
small stake (If the buy-out is for less than 100 per cent of the Target company, the deal is coded
as IBO X%). Many deals described in the media as MBOs are coded on Zephyr as IBOs due to the
fact that the management team do NOT take a majority stake in the Target. There are very few
occasions when Venture Capital may be inserted instead of Private Equity into as the financing
method. This would only occur when an early-stage company raises development capital funding
and the investors achieve a majority stake.

1.5 MANAGEMENT BUY-OUT (MBO)

All or some of the existing management of the company buy at least 50% of the company from its
existing owners. A private equity company is often brought in to aid the purchase through
provision of equity funding. A ‘new company’ (newco) is normally formed by the management team
specifically to purchase the Target and often the newco’s name is an anagram of the Target. The
Acquiror company would also show ‘MBO Team’ unless the name of the newco is known. If the
name of the newco has been released, this company would be entered as the Acquiror. If the

1
Zephyr - Glossary

Private Equity firm backing the deal takes a majority stake in the Target, the deal is not defined as
an MBO and would be coded as an IBO.

1.6 MANAGEMENT BUY-IN (MBI)

The Target company is sold to an external team of managers, with the new management team
taking a majority stake. This often happens with family firms with no-one to pass the company on
to and so the company is sold to a management team. The out-going owners sometimes retain a
small stake. The management team often includes a Private Equity firm however, if the Private
Equity firm takes a majority stake then the deal is coded as an IBO rather than an MBI.

1.7 MANAGEMENT BUY-IN/BUY-OUT (BIMBO)

The target company is sold to a combination of existing management and incoming management.
The management team often includes a Private Equity firm however, if the Private Equity firm
takes a majority stake then the deal is coded as an IBO rather than an MBI/BO.

1.8 MINORITY STAKES

The Acquiror has purchased a number of shares in the Target and the resulting stake held is less
than 50%. Be aware that a stake of only 2% could be classified as an acquisition if the Acquiror’s
overall stake reaches 50% or above. It is not uncommon for the acquirer to increase its stake from
49% to 51% thus enforcing a change to the Acquisition classification.

1.9 JOINT VENTURE

Two or more companies create a new jointly-owned company. The 'Acquiror' companies continue to
exist and a new entity is created. The new company is coded as the Target company and the
investors are coded as joint Acquiror companies. The Vendor field is not used for joint ventures.
If the name of the joint venture has not been announced, then the Acquiror companies’ names, the
activity of the venture and the location of the venture are used as the new company name.
A joint venture is often held on an equally split basis (50:50 for example) however researchers
would always enter 100% in the stake box for a joint venture.

1.10 CAPITAL MARKETS DEALS

1.10.1 INITIAL PUBLIC OFFERING
Shares in the Target company have started trading on a stock exchange for the first time.
If a company has previously listed on another exchange or in another country, the deal is NOT
classified as an IPO but as a secondary listing.

ALL IPOs are added even if shares are not being sold and cash is not being raised. Often a
company raises money through the sale of newly issued shares as part of its IPO. there is a
separate Deal Type classification for Planned IPO which is used until the company’s shares start
trading on a stock exchange - the Deal Type 1 is then changed to IPO. As a result IPO deals can
only have a “Completed” deal status and a Planned IPO deal would never be completed.

The company that will be listed is added as the Target. The Acquiror field is left blank as the shares
are normally sold via public subscription or to a number of institutions via a placing. If the Target is
being spun-off from another company, then this company is entered as the Vendor.
Currently if a public company delists and a significant time later relists on the same stock
exchange, the deal is a new IPO.

1.10.2 PLANNED IPO

The Target company is planning to start trading on a stock exchange for the first time.
The IPO has been proposed/suggested or the Target company has applied to list on a particular
exchange. When a company lists on a stock exchange the Deal Type will be changed to Initial
Public Offering. Acquirors are not added to IPO and Planned IPO.

2
 DEAL CLASSIFICATIONS – DEAL TYPE

1.10.3 SHARE BUY BACK

A company buys back its own shares. The shares are often cancelled but can also be retained and
used for acquisitions or employee share options etc. The company buying back its own shares is
added to the deal record as the Target and the Acquiror is left blank. Normally a share buyback
offer is presented to all shareholders but if the stake has been purchased from a specific
shareholder, then that shareholder would be entered as the Vendor.
Zephyr only covers Share buyback deals that are valued at GBP 20 million or representing a 10%
stake or more in the company (i.e. of the shares in issue NOT of the public float).

3
2 DEAL DATES
2.1 RUMOUR DATE
This is the date on which the deal was first mentioned, as far as Zephyr researchers can ascertain.
The report may be in the press, in a company press release or elsewhere. The rumour is an
unconfirmed report for example, ABC Company is looking at acquisitions in the United States, or
XYZ Ltd is planning to list on the Frankfurt Stock Exchange in the next 3 months. If the first
mention of the deal is when it is officially announced, then that date is entered as Announced with
the same date for both the Rumour date and Announcement date.

2.2 ANNOUNCED DATE

This is the date when details of the deal have been provided, when a formal offer has been made
or when one of the companies involved in the deal has confirmed that the deal is to go ahead. For
example a public takeover deal will be classified as announced when the offer is formally made and
not before. If a company is put up for sale, an announcement date is only added when an Acquiror
company formally agrees to the acquisition, NOT when reports indicate that the company is for
sale.

2.3 COMPLETION DATE

A completion date is added when the deal has been announced as completed or in certain
circumstances has received all approvals to go ahead. Unfortunately, companies seldom announce
this as broadly as the original announcement of a deal, and thus many deals sit as Announced
rather than completed. Zephyr researchers use many sources to attempt to complete deals,
including advisor submissions, company annual report and accounts, company websites and we
welcome input from subscribers as to whether or not a deal has completed.

2.4 EXPECTED COMPLETION DATE

The date on which the deal is expected to be completed. In relation to IPOs, it is the date when the
company’s shares are expected to start trading. When a deal completes and a completion date is
added, the expected completion date would be automatically removed. The Expected completion
date would never be entered as the same as the announced date. Subject to the information
available, the deal would either be completed or announced. Every effort is made to find an article
to provide evidence of the completion and add it to the system. If a deal status is changed to
Completed or Withdrawn, the Expected completion date would be removed.

2.5 WITHDRAWN DATE

This would be added to any deal when the deal status is changed to Withdrawn. The date would
correspond with the recorded date of the withdrawal.

2.6 POSTPONED DATE

This would be added to any deal when the status is changed to Postponed. The date would
correspond with the recorded date of the postponement. The Postponed date would be treated in
the same way as the Expected completion date.

 If a deal status is changed to “Rumour expired”, the Postponed date would be removed.

 If a deal status is changed to “Withdrawn”, the Postponed date would be removed and
a Withdrawn date would be added.

 If a deal status is changed to “Completed”, the Postponed date would be removed and a
completion date would be added.

2.7 NON-SPECIFIC COMPLETION DATES

The following rules are applied when an article does not give a specific completion date but a
general time period:

4
 DEAL DATES

 When a deal completes “early in Q1” – researchers would add the last date of the first
month of the year as the completion date.

 When a deal completes “early in H1” – researchers would add the last date of the second
month of the year.

 When a deal completes “early in the Year” – researchers would add the last date of the
third month of the year.

5
3 DEAL STATUS
3.1 RUMOUR - WITHDRAWN
This is to be added when the parties involved in a rumour decide to discontinue negotiations, or
state that a deal will definitely not go ahead. The date of the statement would be added to the
Withdrawn date box and the comments should reflect that the deal has been withdrawn and why.

3.2 RUMOUR - EXPIRED

This is to be added to any rumoured deal which has had no new information added for 2 years. An
automatic process will update the deals based on the last date a deal was amended but if a
researcher finds a deal which was last updated over 2 years previously, this status can be added if
no further information can be found.

Any deals which are over 2 years old but the time frame given in the original information is still
open would be continued rather than expired. For example a Planned IPO reported in 2006 which
suggests that the company could list before 2010 would not be expired even if no information has
been added since the initial rumour.

3.3 RUMOUR - INFORMAL OFFER REPORTED

This is to be added to a rumoured deal to note that a proposed offer has been reported but is still
subject to a definitive agreement or yet to be put to the shareholders. The deal would be marked
as “Rumour – informal offer reported” and if a rumoured offer price is available, this would be
added to the comments and to the offer price box. If there is no rumoured offer price, the deal
would still be marked as “Rumour – informal offer reported” with the offer price box left blank.
Examples of when this deal status would be used include when a Letter of Intent or Memorandum
of Understanding has been signed or a binding offer proposal has been made.

3.4 LOOKING TO BUY

When a rumour breaks that a company is either on the acquisition trail or looking to acquire a
business or assets then the deal will also be flagged a “rumour – looking to buy”.

When a PE firm targets a specific sector – the ‘Looking to Buy’ box would be ticked. Where a PE
firm is Targeting a non- specific region eg Asia, the ‘Looking to Buy’ box would not be ticked. Build-
up deals – when a specific statement has been issued that a PE firm is to make an add-on
acquisition, the ‘Looking to Buy’ box would be ticked. If the add-on acquisition is referred to as a
possibility in press releases relating to other deals, the ‘Looking to Buy’ box

3.5 LOOKING TO SELL

When a rumour breaks that a company is either looking to be acquired or looking to sell some of its
subsidiaries, businesses or assets then the deal will also be flagged a “rumour – looking to sell”.
When a PE company is linked with a disposal of one of its portfolio companies then “rumour -
looking to sell” would apply.

3.6 LOOKING FOR FUNDING

This would apply when a private company is looking for funding on rumour deals only. Any deal
where a non-listed company is reported to be seeking any form of funding with an equity element
(so including convertible funding) would have this box ticked.

3.7 PENDING SHAREHOLDER APPROVAL

Following the announcement, the deal is moving ahead but is awaiting the approval of
shareholders.

3.8 PENDING REGULATORY APPROVAL

6
 DEAL STATUS

Following the announcement, the deal is moving ahead but is awaiting the approval of one or more
regulatory boards, such as a Stock Exchange or Government department.

3.9 PENDING
This status would be added when a deal has been subject to approvals which have been received
or is subject to shareholder AND regulatory approvals.
If the deal later receives regulatory or shareholder approval and is awaiting the receipt of the
other, the appropriate pending option would be selected eg. If the deal has received shareholder
approval and is only awaiting regulatory approval, the deal status would be changed from Pending
to Pending Regulatory approval. When a deal receives all the relevant approvals, the status would
return to Pending.
If a transaction is “subject to customary closing conditions” this would be added to the comments
but the status of the deal would NOT be altered to Pending.

3.10 UNCONDITIONAL
This status refers to public takeover deals ONLY. Often, the Acquiror will declare that the offer is
conditional on the receipt of acceptances for a certain specified percentage in the Target.

3.11 WITHDRAWN
The deal does not progress for some reason possibly because the parties cease negotiations or
because the Acquiror retracts the offer and makes an increased or decreased offer for the Target
(refer to Public Takeovers). The date that the withdrawal is recorded would be added to the deal
and the deal status must be changed to Withdrawn. The comments should reflect that the deal has
been withdrawn and why.

3.12 POSTPONED
This would be added to any deal that is being delayed for some particular reason. This status is
often used for IPOs where the company delays the listing due to adverse market conditions or
some similar reason. The date that the postponement is recorded be added to the Postponed date
box and the deal status must be changed to Postponed. The comments must reflect that the deal
has been postponed and why.

3.13 ANNOUNCEMENT
The deal status indicating that the Bidder has made a formal offer to the Target, or the companies
involved in the deal confirm that the deal is to go ahead.

7
4 SUB DEAL TYPES
4.1 BUILD UP
Build Up would be added as sub deal type when a Private Equity company builds up the company it
owns by acquiring other companies to amalgamate into the larger firm, thus increasing the total
value of its investments through synergies between the acquired companies.

4.2 CAPITAL POOL

Capital Pool would be added as a sub deal type when the Target company is seeking to raise capital
by "going public" as a Capital Pool Company ("CPC") on the Canadian Venture Exchange ("TSX
Venture Exchange").

4.3 CONTESTED BID

Contested bid would be added as a sub deal type when two or more companies are vying for
control of a listed company. When a second, concurrent, Public Takeover bid is made for the
Target, both deals require Contested bid to be added to the Financing method section. This
Financing method option is only to be used in a Public Takeover deal. Researchers would also refer
to Public takeover, Recommended bid, Unsolicited bid and Hostile bid.

4.4 DEBT & CASH FREE BASIS

Debt & cash free basis would be added as a sub deal type only when the value of the Target
company does not include debt or cash. This does not mean that the Target company has no debt
or no cash but that the calculations that have been made do not take this information into account.
Debt & cash free basis would be added to a deal if a statement is made in the article that the
purchase has been made on a debt and cash free basis. However if debt is mentioned later in the
press release, the information must be added to the deal record but Debt & cash free basis would
NOT be added as a sub deal type along with debt. One or the other would be used.
Debt and cash free basis would only be used as a sub deal type if the value of the Target company
is BOTH debt and cash free – it would not be used if one or the other cited. Both must appear in
the press release.

Debt & cash free can also have an effect on the Enterprise value and the Deal value. For deals
where Debt & cash free basis has been added as a sub deal type, the Deal value and Equity value
are identical.

However, there is a difference between when a Deal value is described as being “debt and cash
free” and when a company is described as “debt and cash free”. The former means the value has
been calculated without taking into account any debt or cash; this is equal to the Equity value. The
latter indicates that the company has no debt or cash and as a result, this can represent the Equity
and the Enterprise values.

4.5 DEMERGER
Demerger would only be added as a sub deal type when a company is demerged via an Initial
Public Offering, the Deal Type would be Initial Public Offering and the sub deal type is Demerger.

4.6 EXIT
Exit would be added as a sub deal type when a Venture Capital/Private Equity company disposes
of all its investment in the Target company.

4.7 EXIT – PARTIAL

Exit – Partial – would be added as a sub deal type when a Venture Capital/Private Equity company
sells only part of its stake in the Target company, retaining part of its original investment..

4.8 EXIT – NEW STAKE

8
 SUB DEAL TYPES

Exit – New stake would be added as a sub deal type when a Venture Capital/Private Equity
company sells its stake in a company, but takes a stake in the newco/company/buy-out team
which is acquiring it

4.9 HOSTILE BID

Hostile bid would be added as a sub deal type when a public takeover bid is classified as hostile
because the management board of the Target company does NOT recommend the bid to the
company’s shareholders. The offer only becomes Hostile when the board reject it and advise the
shareholders to reject it too; the offer will be classified as an Unsolicited bid until that point. This
Financing method is only to be used in a Public takeover deal. Researchers would also refer to
Public takeover, Recommended bid, Unsolicited bid and Contested bid.

4.10 HOSTILE INITIALLY BECAME RECOMMENDED

Hostile initially became recommended would be added as a sub deal type when a public takeover
bid was classified as hostile because the management board of the Target company did not
recommend the bid to the company’s shareholders but have since decided to recommend the offer.
Researchers would remove Hostile bid from the Financing method section and replace it with
Hostile initially became recommended. This Financing method is only to be used in a Public
takeover deal. Researchers would also refer to Public takeover, Recommended bid and Hostile bid.

4.11 LEVERAGED BUY OUT

Leveraged buy out would be added as a sub deal type when a significant amount of borrowed
funds/debt are used to acquire the Target. This financing method would be added to an Acquisition,
IBO, MBO or an MBI whenever the deal is described as a Leveraged buy out (LBO), Leveraged
Management buy out (LMBO) or Leveraged buy in (LMBI).

4.12 MULTIPLE BIDS

Multiple Bid would be added as a sub deal type where the target company has been subject to
either competing bids by different acquiror company’s or where the acquiror had withdrawn their
original bid and superseded it with either a lower or higher offer.

4.13 NATIONALISATION
Nationalisation would be added as a sub deal type when a government, council or other state-
owned entity acquires a company or stake in a company. The company, or part of the company,
moves from private to state ownership/ control.

4.14 PIPE
PIPE is an acronym for Private Investment in Public Equity and would be added as a sub deal type
when a private investment company or accredited investors invest in a publicly quoted company to
acquire new shares at a discounted price to the current market price.

4.15 PRIVATISATION
Privatisation would be added as a sub deal type when a government, council or other state-owned
entity disposes of a company or stake in a company that it owns. The company, or part of the
company, moves from public to private ownership (A publicly-listed company is still a 'private'
company for this definition as the shares are owned by private individuals).

4.16 PUBLIC TAKEOVER

Public takeover would be added as a sub deal type when the Acquiror makes a Public Offer to the
shareholders of a Target company which is a listed company either on an official stock exchange,
or sometimes on an unofficial basis. The offer results in the Acquiror owning all shares of the
Target.
Researchers would be aware that the purchase of a stake in a public company is not necessarily a
Public takeover; in order to categorise a deal as a Public takeover, the Public Offer must be made

9
Zephyr - Glossary

for the remaining shares in the Target Company. In a Public takeover, the Acquiror will purchase all
of the (remaining) shares and the Target Company’s shares will be delisted from the stock
exchange.

4.17 RECOMMENDED BID

Recommended Bid would be added as a sub deal type for Public takeover deals where the
management board of the Target Company has agreed that the terms of the takeover offer are fair
and have recommended that their shareholders accept the offer. Researchers would refer to Public
takeover, Unsolicited Bid, Contested Bid and Hostile bid.

4.18 RECOMMENDED INITIALLY BECAME HOSTILE

Recommended initially became hostile would be added as a sub deal type when a public takeover
bid was originally recommended by the management board of the Target company to the
company’s shareholders but the board has since decided to withdraw its recommendation the
offer. This can happen when the terms of a takeover change or a more attractive offer is made.
Researchers would remove Recommended bid from the Financing method section and replace it
with Recommended initially became hostile. This Financing method is only to be used in a Public
takeover deal. Researchers would also refer to Public takeover, recommended bid and Hostile bid.

4.19 RESTRUCTURING
Restructuring would be added as a sub deal type where there is an element of a company
restructuring its group, e.g. merging 2 or more of its subsidiaries. Other examples include a
company creating a new holding company for itself which it transfers into with no essential change
of ownership (i.e. the company’s shareholders receive an equal and representative stake in the
new holding company) or a company merging a wholly-owned subsidiary into itself.

4.20 REVERSE TAKE-OVER

Reverse takeover would be added as a sub deal type when the Acquiror company issues shares to
acquire the Target company which results in the shareholders of the Target (the Vendors) owning a
majority stake in the Acquiror. The Acquiror Company is always the company issuing shares. The
result is that the shareholders of the Target Company end up in control of the Acquiror Company
which often changes its name to that of the Target Company.

4.21 SCHEME OF ARRANGEMENT

Scheme of arrangement would be added as a sub deal type the phrase “Scheme of arrangement”
is used in a press release referring to a deal. This categorisation is difficult to define and can have
different meanings in different countries.

4.22 TENDER OFFER

Tender offer would be added as a sub deal type if it occurs in the following circumstances:

Firstly a Target company receives an offer to purchase some or all of the shareholders' shares
usually at a premium to the market price. The offer can represent a takeover bid in the form of a
public invitation to shareholders to sell their shares. The result is that shareholders make a
significant profit and the acquirer gains control of the company.

If a listed company makes a formal open offer to buy back its own shares at a stated price within a
specified time frame then this type of deal would be categorized as a Share buyback.

4.23 UNSOLICITED BID

Unsolicited bid would be added as a sub deal type when a company receives a bid even though the
shareholders are not looking to sell. The Target Company may decide to ignore the bid, reject the
bid, enter into discussions with the potential Acquiror, or accept the bid. While not necessarily
desired by the Target Company, an Unsolicited bid does not have to be unfriendly. This Financing
method option is only to be used in a Public Takeover deal. Researchers would also refer to Public
takeover, Recommended Bid, Contested Bid and Hostile bid.

10
 SUB DEAL TYPES

4.24 SECONDARY LISTING

Secondary Listing would be added as a financing method only when the Target Company is raising
capital in connection with an additional listing on another stock exchange.

4.25 START UP
Start Up would be added as a sub deal type when there is a new company, formed by individual
entrepreneurs or a venture capital / private equity company.

11
5 FURTHER DEAL CLASSIFICATION
5.1 ASSET-BASED FINANCE
The Acquiror uses its balance sheet assets (such as accounts receivable, short-term investments or
inventory) to obtain a loan or borrow money for the purposes of completing a transaction. The
Acquiror provides a security interest in the assets to the lender. This differs from traditional
financing methods, such as issuing debt or equity securities, as the company simply pledges some
of its assets in exchange for a quick cash loan.

This type of financing is typically used for short-term borrowing or working capital. Companies
using asset financing commonly pledge their accounts receivable, but the use of inventory assets is
becoming more frequent.

There is no financing method option available to indicate when a deal includes an element of asset-
based financing but researchers would add these companies as Asset-Based Finance advisers to
the Acquiror.

5.2 RECEIVERSHIP DEALS

When a company fails, and becomes bankrupt or goes into liquidation, the Receivers (also known
as Liquidators or Administrators) are put in place.
The difference between the three is :

 The Receiver keeps the business running in its original form while decisions about its future
are made (the Receiver is not responsible for selling the company).

 The Administrators put together a plan as to what can be done.

 The Liquidators sell off the assets.

The Receiver's job is normally carried out by an accountancy firm. The Liquidator is in charge of
selling-off the assets of the bankrupt firm and the resulting funds are used, firstly to repay the
company's creditors (banks, bondholders etc) and any further funds are used to repay the
shareholders of the company. Often the shareholders receive little, or no money.

Researchers would not add companies in administration as a deal until a sale is specifically
mentioned.

12
6 METHODS OF PAYMENT
6.1 CASH
Cash would be added as a method of payment when the consideration contains at least an element
of cash. Cash does not refer to actual money but to payment by cheque or transfer of funds. See
also Shares, Debt and Other. The value and currency of the cash element, where known, would be
provided. Although cash is the most common form of payment, if an article does not specify the
form of payment researchers would not assume that the consideration will be paid in cash and add
it. If the method of payment is not known, the researcher would not add any types of payment.

6.2 SHARES
Shares would be added as a method of payment when the consideration contains at least an
element of shares. The Acquiror gives its own shares to the Vendor. If the Acquiror Company
issues new shares to satisfy payment under the terms of the transaction, Capital increase – Vendor
placing would also be added as a financing option. Therefore, if new shares in the Acquiror are
issued, as is the case most of the time, researchers would add Shares as the method of payment
and Capital Increase – Vendor placing as the financing category.

The value of the share element will be calculated based on the number of shares to be issued as
payment multiplied by the closing price of the Acquiror’s shares on the day before the
announcement. The value and currency of the share element, where known, would be provided.
If the shares transferred are those of a third party, and not the Acquiror, “Other” would be added
as method of payment rather than Shares.

6.3 LOAN NOTES

Loan Notes would be added as a method of payment when the consideration contains at least an
element of loan notes. A loan note, or promissory note, is essentially an IOU from the Acquiror to
the Vendor, sometimes these notes carry interest. The value and currency of the loan note
element, where known, would be provided.

6.4 OTHER
Other would be added as a method of payment when the consideration includes a method of
payment other than Cash, Loan Notes, Shares or Debt. This payment can take the form of: shares
in a third party company, a provision of services agreement, transfer of assets or licences etc.
“Other” can also include “Payment in Kind” (PIK).

6.5 DEBT
Debt would be added as a method of payment when the consideration contains an element of debt
repayment/assumption. The Acquiror may pay-off the debt of the Target Company on completion
of the deal or it may take on the debts of the Target as its own. The value and currency of the debt
element, where known, would be provided. Researchers would always include the debt value in the
Deal value if it has not already been added.

6.6 CASH ASSUMED

Cash Assumed would be added as a method of payment when the Target company that has been
acquired has cash left in the business which the Acquiror assumes. The value (or amount) of cash
that has been assumed must be DEDUCTED from the Deal value as the Acquiror essentially gets
money back.

For example, if a company is bought for GBP 200 million but has GBP 50 million in cash which the
Acquiror assumes, the following changes occur:

 Deal value = GBP 150m (GBP 200m – GBP 50m)

 Equity value = GBP 200m

 Enterprise value = GBP 150m

13
Zephyr - Glossary

This can be a little confusing as debt can be assumed as well as cash. Taking the example above, if
the same company also had GBP 100m of debt to be assumed by the Acquiror, the following
changes would occur:

 Deal value = GBP 250m (GBP 200m + GBP 100m debt – GBP 50m cash assumed)

 Equity value = GBP 200m

 Enterprise value = GBP 250m

6.7 DEFERRED PAYMENT

Deferred payment would be added as a method of payment when the Acquiror satisfies the
payment of all, or more normally part of, the consideration in a number of mutually agreed
instalments, usually over a number of months or years. Often an initial consideration is paid on
completion. Researchers would always include the maximum possible consideration in the Deal
value box. No figures are attached to the Deferred consideration.

6.8 EARN OUT

Earn Out would be added as a method of payment when the consideration paid includes an ‘earn
out’ component which is an additional payment over-and-above the basic agreed consideration.
This is normally linked to the acquired company meeting certain agreed financial targets (e.g.
turnover, EBIT, net profit etc) in a forthcoming time period. The value of the Earn Out must be
added to the Deal value and also the Earn out value would be shown separately. Deal values
including Earn Out would be ticked as estimated. If the method of payment is known, and the earn
out takes the same form, researchers would add the earn out figure to the value given to the
method of payment.

14
7 DEAL FINANCING
7.1 ANGEL INVESTMENT
Angel Investment would be as a financing method when a 'business angel' invests in a firm that is
often a start-up or developing company. A business angel is an individual that invests in companies
in much the same way that venture capital companies do.

This can occur with business angels acting individually, as a group, or via an angel investment
agency. Researchers would refer to the Venture Capital & Private Equity Manual for further details.

7.2 CAPITAL INCREASE

Capital Increase would be added as a financing method when a company issues new shares, thus
increasing its share capital. This can happen in a number of different ways and for a number of
different reasons. The generic Capital Increase tag can be used when further details are not known
or if warrants/options are being converted into shares.

Researchers would be aware that some capital increase deals can involve a large number of
participants on the Acquiror side. Researchers are only required to add named Acquiror companies
for those companies/individuals which have taken a stake of 1% or more in Target Company. Any
other Acquirors that need to be added can be covered by using the generic “Investors” record.

7.3 CAPITAL INCREASE – CONVERTED DEBT

Capital increase - Converted debt would be added as a financing method when the Target company
issues new shares to give to one of its creditors. As a result, the Acquiror/creditor receives a stake
in the Target Company in lieu of repayment of inter-company debt and thus the Target reduces its
debt burden through the issue of new shares. If existing shares are provided to pay the creditor,
researchers would refer to the separate Financing method: Converted Debt.

Researchers would be aware that deals involving the use of Capital Increase - Converted debt as a
financing method will also require the use of Converted Debt used as separate financing method.
Converted debt is the Acquiror’s method of payment and can be added to deals other than this
type. Capital increase – Converted debt is the Target’s form of financing. Capital Increase -
Converted debt will always be accompanied by Converted debt. No other financing method needs
to be added.

7.4 CAPITAL INCREASE – CONVERTIBLE BOND ISSUE

Capital increase - Convertible bond issue would be added as a financing method when the Target
company issues 'convertible bonds' which are bonds that can be converted into equity (shares in
the company) at a later date. While bond issues are not generally covered by Zephyr, convertible
bond issues will eventually lead to an increase in the number of shares for the issuer, so these
deals are counted as a capital increase.

Researchers would take care to avoid confusing ‘convertible bonds’ with ‘exchangeable bonds’
which usually convert either into existing shares in the issuer or into shares in a third party.

7.5 CAPITAL INCREASE – CONVERTIBLE LOAN NOTES

Capital increase - Convertible loan notes would be added as a financing method when the capital of
the Target Company is increased when another company, which holds a convertible loan note on
the former, converts this loan note into new shares.

An offering of convertible loan notes that are NOT convertible into shares or any other securities of
the company but instead are converted into CASH would NOT be added as a deal. Unlike ordinary
offerings of (non-convertible) notes, which are also not covered by Zephyr, for which the
repayment of the notes are due on a specified date, convertible notes (into cash or shares) may be
converted prior to the due date. Researchers would only add a new deal if the convertible loan
notes are convertible into shares of the Target Company.

7.6 CAPITAL INCREASE – PUBLIC OFFER

15
Zephyr - Glossary

Capital increase - Public offer would be added as a financing method when the Target company
offers new shares to the general public. I.e. The shares are open to be acquired by anyone or any
company. (This has replaced the previous financing method Capital increase – Open offer). A Public
offer may include offers to Retail Investors, i.e. individuals which invest in the market as opposed
to institutions, although a retail offer may also form part of a rights issue.

7.7 CAPITAL INCREASE – PLACING

Capital increase - Placing would be added as a financing method when the Target company offers
new shares via a placing with either institutions or a narrow group of investors. Placings tend to be
made via brokers or sponsors which then source the buyers.

Researchers would be aware that Capital increase - Placing is not a catch-all term to be used if
unsure if an offer is a Private placing or a Public offer. If researchers cannot be sure what type of
capital increase is occurring, the generic term Capital increase would be added as a financing
method.

7.8 CAPITAL INCREASE – PRIVATE PLACING

Capital increase – Private Placing would be added as a financing method when new shares are sold
via a process of direct negotiation with one or more specific companies or individuals, or via agents
or representatives of these entities. These tend to mainly involve institutional investors, such as
pension funds and other financial organisations. This term also includes Preferential Allotments in
India. For further clarification, researchers would refer to the Regional Knowledge files held on the
Shared Drive.
PIPE deals also tend to be Private placings however if a Target is not listed and the new shares are
being acquired by a Venture capital or Private Equity firm, the deal would be classified as a
Development Capital deal rather than a private placing.

7.9 CAPITAL INCREASE – RIGHTS ISSUE

Capital increase – Rights issue would be added as a financing method when newly created shares
are offered to existing shareholders i.e. shareholders are offered 1 new share for every three
shares that they already own. Researchers would be aware that stakes for rights issues can be
easily calculated if the ratio is known. For example 1 new share for every 3 owned indicates that 1
out of 4 shares of the enlarged capital will be involved therefore the stake will be 25%.

Any calculations done at the beginning of the deal and throughout must be explained in the
comments for the sake of clarity.

7.10 CAPITAL INCREASE – VENDOR PLACING

Capital increase - Vendor placing would be added as a financing method when the Acquiror issues
new shares and exchanges them with the Target's shareholders (i.e. the Vendor) for shares in the
Target Company. The shares are used as a method of payment and Capital increase - Vendor
placing would always be added when “Shares” is added as the mode of payment to the financing
method section.

Shares are being sold by shareholders, the information would also be added as a new deal. The 2%
stake/GBP 1 million threshold does not apply to these deals as we cover all IPO and secondary
listing deals.

Researchers would add the stock exchange. This type of deal is not classed as an IPO. As a result,
the correct Deal Type to use is Minority stake.
Researchers would be aware that a transfer from one stock exchange to another is not be
considered to be a deal.

7.11 CONVERTED DEBT

Converted debt would be added as financing method when a creditor takes a stake in the Target
company in place of debt. The stake taken is from existing shares .i.e. a shareholder of the Target
company provides their own shares to give to one of its creditors. So, the Acquiror/Creditor
receives a stake in the Target company, in lieu of repayment of inter-company debt and thus the

16
 DEAL FINANCING

Target company reduces its debt burden. If new shares are issued, researchers would refer Capital
increase – Converted debt.

7.12 CORPORATE VENTURING

Corporate Venturing would be added as financing method when a non-Venture Capital/Private
Equity company joins a round of Development Capital financing. The other Acquiror companies may
be Venture Capital/Private Equity companies but when a non-financial corporate body joins the
round, we use Corporate Venturing to denote this. This is also used if one of the VC/PE firms is
owned by a non-financial company i.e. If one of the investors is Ford Ventures which is owned by
Ford Motor Company, then Corporate Venturing would be used.

7.13 DEVELOPMENT CAPITAL

Development capital would be added to as a financing method when a Venture Capital/Private
Equity firm takes a minority stake in the Target company, for investment purposes. The stake
consists of newly-issued shares in the Target. This is the generic Development Capital entry which
would be used when the round of financing is not known.

7.14 DEVELOPMENT CAPITAL - SEED

Development capital - seed would be added as a financing method when the deal records the very
first, initial funding for a firm. Researchers would be aware that this round occurs before the 1st
Round. Researchers would refer to the Venture Capital & Private Equity Manual for further details.

7.15 DEVELOPMENT CAPITAL –1ST ROUND/8TH ROUND

Development capital - 1st round/ 8th round usually follow the Seed investment round and
subsequent rounds of Venture Capital financing are numbered. If the number is not known,
researchers would add the generic Development Capital to the Financing method section. An
equivalent to the terms 1st round, 2nd Round etc is often Series A, Series B etc.

If a researcher identifies a deal as a later round of funding but there are no deals on the system for
earlier funding rounds, the researcher would try to find information relating to the earlier funding
rounds and create the deals as appropriate.

7.16 LEVERAGED BUY OUT

Leveraged buy out would be added as a sub deal type when a significant amount of borrowed
funds/debt are used to acquire the Target. This financing method would be added to an Acquisition,
IBO, MBO or an MBI whenever the deal is described as a Leveraged buy out (LBO), Leveraged
Management buy out (LMBO) or Leveraged buy in (LMBI).

7.17 MEZZANINE
Mezzanine would be added as a financing method when the Acquiror has raised finances for an
acquisition through a provider of Mezzanine finance. Mezzanine is half way between debt and
equity, and normally involves the issue of convertible bonds or warrants.
Researchers would be aware that in the US, Mezzanine may refer to the stage of development a
company is at in relation to its funding. E.g. Start-up, First Round, Mezzanine, Pre-IPO. Therefore a
Mezzanine funding round is not necessarily a round of mezzanine financing, but is in fact a round of
development capital funding. In the US, Mezzanine financing will most likely be referred to as
mezzanine debt..

7.18 NEW BANK FACILITIES

New Bank Facilities would be added as a financing method when the Acquiror has negotiated new
facilities with a bank, in order to raise finances for an acquisition. If the identity of the lender(s) is
known, researchers would add these companies as Debt Provider advisers to the Acquiror.
Researchers would be aware that existing lending facilities that have been extended do not require
New Bank Facilities to be added as a financing method.

17
Zephyr - Glossary

7.19 PRIVATE EQUITY

Private Equity would be added as a financing method when the deal contains an element of Private
Equity activity on the Acquiror’s side of the deal whether this is through funding or through an
MBO, an MBI or an IBO. This Financing method would NOT be used when the Private Equity
company is the Vendor; in this case one of the Exit options would be used.

7.20 VENTURE CAPITAL

Venture Capital would be added as a financing method when the deal contains an element of
Venture Capital activity on the Acquiror’s side of the deal via a Development Capital deal. This
Financing method would NOT be used when the Venture Capital company is the Vendor; in this
case one of the Exit options would be used. Researchers would refer to Exit, Exit – Partial, Exit –
New stake.

18