M&A Due Diligence Glossary for Deal Teams.

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Quality of Earnings (QoE)

QoE matters because buyers pay for recurring earnings, not temporary noise.

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Net Working Capital (NWC)

NWC becomes a negotiated value-transfer mechanism, not just a balance-sheet formula.

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Change-of-Control Clause

A contract can look fine until control changes and the clause becomes a live deal issue.

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Letter of Intent (LOI)

The LOI is where early conviction turns into a structured deal process.

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EBITDA Adjustments

Adjusted EBITDA is only credible when every add-back is evidence-backed and reviewable.

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Pre-LOI Due Diligence

Pre-LOI diligence is about early conviction and red-flag detection, not full verification.

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Data Room

A data room stores documents, but the deal still needs a separate operating layer to turn files into findings.

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Virtual Data Room (VDR)

A VDR controls files. It does not solve cross-workstream diligence execution on its own.

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Section 382 NOL Limitation

Tax attributes are only worth what the buyer can actually use after closing.

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SALT (State and Local Tax)

A company can create state tax exposure long before management recognizes it.

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Deferred Tax Liability

Deferred taxes are timing issues today that can become cash-tax issues later.

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Transaction Advisory

Transaction advisory is the bridge between specialist analysis and practical deal action.

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Buy-Side Due Diligence

Buy-side diligence exists to protect the buyer's capital and decision quality.

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Sell-Side Due Diligence

Sell-side diligence is preparation work designed to make the later buyer review cleaner and faster.

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Representations and Warranties Insurance

RWI can shift risk, but it does not eliminate the need for strong diligence.

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Working Capital Peg

The peg is the negotiated answer to what normal working capital should look like at close.

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Net Debt in M&A

Net debt analysis is about economic treatment, not just balance-sheet labels.

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Management Quality of Earnings

Management QoE is a starting point, not the final answer.

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Deal Certainty

Deal certainty is the practical question behind every diligence workstream: can this transaction actually close as planned?

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Investment Committee (IC) Memo

The IC memo is the final test of whether diligence findings are decision-ready.

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Diligence Audit Trail

An audit trail is what makes a diligence record explainable after the live process ends.