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Corporate Finance Glossary

Anti-Embarrassment Clause

An anti‐embarrassment clause is often included in a share purchase agreement where the seller requires the purchase price to be recalculated and subject to an upwards adjustment in the event that the buyer sells on the shares (or other assets) at a higher price within a specified period following completion of the original transaction.

Completion Accounts

A set of accounts of the target company which are drawn up at or shortly after completion of the acquisition of the company which will form the basis for determining the final amount of consideration payable. The amount of the purchase price already paid is adjusted by reference to whether these accounts show an increase or decrease from a pre-determined figure.


A document that is executed in favour of a lender or a creditor which grants him security over the whole or substantially the whole of a company's assets. Typically a debenture creates a fixed charge over the assets of the company which are not disposed of in the ordinary course of business and a floating charge over the rest of the company's undertaking

Deferred Consideration

A term used to refer to consideration that will or may be payable sometime in the future rather than at completion. It is usually encountered in connection with asset and share sales. Deferred consideration may be payable in a number of different ways including cash, loan notes and/or shares.


Where a business splits into two or more separate businesses, usually by issuing shares in one or more companies to the shareholders of the existing business.

Escrow Account

An account opened in the joint names of the seller and buyer or their respective solicitors into which part of the purchase price is paid pending the preparation of the completion accounts and the determination of the value to be attributed to identified assets.

Hive Up/Hive Down

The transfer of a business or assets intra-group to a parent company. A form of reorganisation of a company whereby a business or businesses are transferred to a subsidiary.

Locked Box

This is an alternative mechanism to preparing completion accounts. Under this mechanism the buyer prices the target company from a historic set of accounts, in respect of which there will be no ability to adjust after completion, the buyer will then rely on contractual protection to ensure that no value (or leakage, such as expenditure on or disposal of capital equipment) leaks out of the company between the reference date and completion. Essentially, this means that the equity price is fixed, w


A transaction where a company is acquired by its existing management team supported by private equity investment and/or debt financing/A transaction where both new and existing management are involved in the acquiring the company.


In the context of an acquisition, the retention of part of the purchase price as security for the buyer for potential breaches of warranty and/or indemnity or if the buyer has doubts about the creditworthiness of the seller. The retention may be for a fixed period, such as until expiry of the warranty limitation period.

Wrong Pockets Clause

This clause is commonly found in share sale agreements and seeks to cater for inadvertent and, perhaps unknown, "wrong" ownership of assets. It provides for assets which have been attributed to the target company and which are subsequently identified to be owned by another member of the other group (i.e. "in the wrong pocket") to be transferred back to the target company at no further expense to the buyer.

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