Page 95 - M & A Disputes

Appendix

Definitions

Definitions for Merger and Acquisition Disputes

Background and Introduction

Merger and acquisition (M&A) transactions are defined through a variety of legal documents that use
both legal and financial terms. Litigation often results from disputes over the interpretation of various
terms and their definitions; accordingly, the forensic practitioner should be aware of such definitions.
The practitioner should have a grasp of the following definitions, regardless of whether serving as a con-
sultant on the front end of negotiating the deal or as an expert witness or a neutral accountant in a dis-
puted matter. This appendix of the practice aid provides users with selected definitions that a practitioner
and other interested parties may find in the variety of documents related to the subject transaction(s) in
the matter.

Attorneys use a "Definitions" section of legal agreements to reduce the length of other sections in the
subject documents. As such, this appendix is a tool to assist attorneys and practitioners in recognizing
certain common definitions that may be encountered in the negotiations, the documentation of business
transactions, and disputes. It is also important to note that the attorneys and the parties that they repre-
sent in an M&A transaction will specifically define key terms in other sections of the subject legal doc-
uments. Care should be given when reviewing such relevant documents with respect to the understand-
ing and interpretation of definitions.

The following definitions come primarily from three significant sources:

1. Black’s Law Dictionary DIGITAL + bonus pocket edition. Such references will be referred to as
BLD. It should be noted that the majority of the definitions selected are from the "Definitions
and Usage" section of the American Bar Association’s (ABA’s) Model Stock Purchase Agree-
ment with Commentary, Second Edition.

2. Appendix B, "International Glossary of Business Valuation Terms," fn 1 of Statement on Stand-
ards for Valuation Services (SSVS) No. 1, Valuation of a Business, Business Ownership Interest,
Security, or Intangible Asset (AICPA, Professional Standards, VS sec. 100). fn 2

fn 1 According to appendix 5, "International Glossary of Business Valuation Terms," of the third edition of Gary R. Trugman’s book
Understanding Business Valuation, A Practical Guide to Valuing Small to Medium Sized Businesses, appendix B, "International Glos-
sary of Business Valuation Terms," of Statement on Standards for Valuation Services (SSVS) No. 1, Valuation of a Business, Business
Ownership Interest, Security, or Intangible Asset (AICPA, Professional Standards, VS sec. 100), was developed by the AICPA, the
American Society of Appraisers, the Canadian Institute of Chartered Business Valuators, the National Association of Certified Valua-
tors and Analysts, and the Institute of Business Appraisers

[t]o enhance and sustain the quality of business valuations for the benefit of the profession and its clientele, [and] the [aforemen-
tioned] identified societies and organizations have adopted the definitions for the terms included in [appendix B]. The perfor-
mance of business valuation services requires a high degree of skill and imposes upon the valuation professional a duty to com-
municate the valuation process and conclusion in a manner that is clear and not misleading. The duty is advanced through the use

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