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Appendix – Glossary
ACQUISITION SHEET: standard document that the Project Team must fill in order to perform the financial valuation. Together with the BUSINESS CASE, it will be used by the INVESTMENT COMMITTEE to make the decision (“GO” / “NO GO”) on the proposed transaction. It must be prepared before issuance of a LOI and updated after DUE DILIGENCE.
BUSINESS CASE: standard document that the Project Team must fill in containing key information on the target, integration plan and timeline. Together with the ACQUISITION SHEET, it will be used by the INVESTMENT COMMITTEE to make the decision (“GO” / “NO GO”) on the proposed transaction. It must be prepared before issuance of a LOI and updated after DUE DILIGENCE.
CALL OPTION: an option granted by the seller to the purchaser to buy a certain number of shares during the agreed call period. The seller undertakes to sell these shares to the seller during such call period and the purchaser reserves its right to exercise or the option not (no obligation).
CLEAN TEAM: a group of persons bound by specific confidentiality obligations and authorized to assemble, review and analyze COMPETIVELY SENSITIVE INFORMATION.
CLOSING: the final sale of a property (whether in the form of assets or shares), whereby title is transferred from the seller to the purchaser (also often called “completion”).
CODE OF CONDUCT: available on the following link https://sonepar. sharepoint.com/sites/INT_Legal_RisksandCompliance/SitePages/ Code-of-Conduct.aspx
COMPETITIVELY SENSITIVE INFORMATION: is any information that a competitor would not want another competitor to have (such as current or future prices, margins, detailed information on customers and suppliers, strategic plans).
CLOSING ACCOUNTS: mechanism in which the final share price is determined based on a future date after signing of the SPA on which a balance sheet is to be agreed. It will then form the basis for determining the NET DEBTS and the WORKING CAPITAL that will be used in the final price according to agreed formula.
COMPLIANCE POLICIES AND PROCEDURES MANUAL: available on the following link https://sonepar.sharepoint.com/sites/INT_ Legal_RisksandCompliance/SitePages/Compliance-Policies-and- Procedures-Manual.aspx
CONFIDENTIALITY AGREEMENT: an agreement signed between the SONEPAR acquiring entity and the target company (or its shareholder(s)) to ensure confidentiality of all information exchanged during the acquisition process. It is also often called NDA (non-disclosure agreement).
DATA ROOM: a secure location (physical or electronic) wherein a firm’s confidential data is then placed for inspection by the purchaser. The data room is an integral part of the DUE DILIGENCE process, which takes place after a non-disclosure agreement has been signed. By accessing the DATA ROOM, the purchaser and its advisors will have the opportunity to review these documents and form a better picture of the target. Access to a DATA ROOM is subject to rules issued by the seller.
DCF (DISCOUNTED CASH FLOW): a valuation method based on an actualization of future free cash flows. These are estimated on the basis of a forecast and then actualized to the current date by using an actualization rate or discount factor known as the WACC.
DISCLOSURE LETTER: the document whereby the seller makes ‘disclosures’ against the REPRESENTATIONS & WARRANTIES it made under the SPA. The issues listed in a disclosure letter are disclosed to the purchaser and can no longer be used as justification for an allegation of breach of such REPRESENTATIONS & WARRANTIES.
DUE DILIGENCE: the investigation performed by the purchaser into the details of a potential investment, such as an examination of operations and management and the verification of material facts.
EARN OUT a supplement to the purchase price paid to sellers when the target company reaches certain agreed performances and/or milestones after CLOSING.
EBIT: is a company net income before income tax expenses and interest expenses are deducted.
EBITDA: is a company’s net income before income tax expenses, interest expenses, depreciation and amortization are deducted.
ENTERPRISE VALUE: the total consideration or price on a debt- free, cash-free basis. It represents the market value of the capital employed (or the value of the company if it has no debt).
ESCROW (also called RETENTION FUND): money, real estate, securities or other property deposited with a neutral third party (the ESCROW agent) to be delivered upon fulfillment of certain conditions, as established in a written agreement.
GOODWILL: an intangible asset which provides a competitive advantage, such as a strong brand, reputation, market share, the standing of the business in the community, high employee skills and motivation, etc. In an acquisition, GOODWILL appears on the balance sheet of the purchaser in the amount by which the purchase price exceeds the net tangible assets of the target company. In a share deal, the GOODWILL is the difference between the book value of the shares acquired (shareholders’ funds) and the price paid for the shares. In an ASSET DEAL, the GOODWILL is the difference between the book value of the purchased assets and the price paid for the assets.
GOVERNANCE CHARTER: is available on the following link https:// sonepar.sharepoint.com/sites/INT_Legal_RisksandCompliance/ SitePages/Legal.aspx
GROUP APPROVAL MATRIX: the matrix set up by the GROUP to define the level of approval(s) required for each operation.
HUNTER: a person who initiates the acquisition process by approaching the target.
INDEMNITIES: contractual commitment by a party to cover any potential liability and make good a loss suffered by another party. In the M&A context, indemnities will often be used to cover specific issues (e.g. environmental issues, litigation or tax) identified during the purchaser’s DUE DILIGENCE in order to allocate risk back to the seller against the known event, risk or liability. The scope of recovery under an indemnity claim is broad, with the innocent party generally able to cover their whole loss on a dollar-for-dollar basis provided the loss is within the terms of the indemnity and the claims period’ in the SPA has not expired.
INDICATIVE OFFER: a non-binding expression of interest to purchase the target company or some of its assets.
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