M&A terms glossary: sell-side vocabulary and the data licensing terms it meets

How to use this glossary

This glossary pairs the sell-side vocabulary an owner hears from bankers and deal counsel with the data licensing terms those words run into. Each entry gives a working definition, then a short note where it meets a license of the company's operational records. Use it when a client is weighing a sale and a license in the same year, or when a buyer's counsel finds a data license on a disclosure schedule for the first time.

One definition anchors the rest. A data license is a contract in which a company lets an AI lab or data buyer use a defined set of its records for an agreed purpose and term, keeps ownership, and is paid for that permission. It is not a sale of the data; the distinction is set out in licensing vs selling data.

Deal-stage terms

• Teaser. A short, anonymous summary sent to prospective buyers. Licensing note: leave record archives out of the teaser; they come up in diligence.
• CIM (confidential information memorandum). The full marketing book, shared under an NDA. Licensing note: if the company has licensed records, say so plainly here so the license is not a diligence surprise.
• IOI (indication of interest). An early, non-binding price range from a bidder.
• LOI (letter of intent). A term sheet, mostly non-binding, that sets price, structure and an exclusivity period. Licensing note: check whether its no-shop language reaches licensing transactions before the seller signs.
• Exclusivity or no-shop. The seller's promise not to solicit or negotiate with other buyers for a set period. Licensing note: some clauses cover only a sale of the company or its assets; others reach any transaction outside the ordinary course.
• Virtual data room (VDR). The secure site where diligence documents are shared. Licensing note: a data room index lists documents, while a data inventory lists systems, record types and years of history.
• QoE (quality of earnings). An accounting firm's analysis of normalized EBITDA. Licensing note: a one-time license payment is generally treated as non-recurring, so expect it to be adjusted out of run-rate earnings.
• Confirmatory diligence. The detailed review after the LOI. Licensing note: expect questions on IP ownership, privacy and any existing license.
• Retrade. A buyer's attempt to lower price or worsen terms after exclusivity; the full entry is what a retrade is in M&A.

Price and structure terms

• Enterprise value. The value of the operating business before adjusting for cash and debt.
• Cash-free, debt-free. The convention under which the seller keeps cash and repays debt at closing. Licensing note: decide early whether license cash and receivables count as cash, working capital or neither.
• Net working capital peg. The target working capital delivered at closing; the difference adjusts the price. Licensing note: a large license receivable can distort the peg unless the agreement addresses it.
• Earnout. Deferred consideration paid if the business hits targets after closing. Licensing note: keep license income out of earnout metrics unless both sides agree how to count it.
• Rollover equity. Proceeds the seller reinvests in the buyer's entity; see rollover equity explained. Licensing note: a seller who rolls equity keeps an interest in what the buyer later does with the records.
• Seller note. Part of the price paid over time, in effect a loan from seller to buyer.
• Escrow or holdback. Part of the price set aside to meet indemnity claims.
• R&W insurance. A policy covering losses from breaches of representations. Licensing note: underwriters may ask about privacy and existing licenses and exclude known issues.

Contract terms

• Purchase agreement. The definitive deal document: a stock purchase, asset purchase or merger agreement.
• Representations and warranties. Statements of fact about the business. Licensing note: reps on IP ownership, privacy compliance and material contracts all touch a license.
• Disclosure schedule. The lists and exceptions that qualify the reps. Licensing note: an existing data license, its field of use and its exclusivity belong on the material contracts schedule.
• Material contract. A contract inside the agreement's defined categories or value thresholds. Licensing note: exclusivity and IP grants can bring a license inside the definition even when its fee is small; check the definition.
• Excluded asset. Something the seller keeps in an asset sale. Licensing note: settle which side owns the record archives before anyone promises the buyer full IP ownership.
• Assignment. Transfer of a contract to a new party, often only with consent.
• Change of control. A clause triggered when ownership of a party changes, even with no assignment.
• Indemnification and survival. The seller's duty to cover losses from breaches, and how long claims may be brought.
• TSA (transition services agreement). Services one side provides the other after closing. Licensing note: if a TSA keeps an old system running, use that window to preserve exports.

Data licensing terms

• Licensor and licensee. The company granting rights, and the AI lab or data buyer receiving them.
• Data inventory. A list of the company's systems, record types, years of history and export ability, prepared before any pricing.
• Exclusive license. Only the licensee holds the specified rights for the agreed field and term. SourceX deals are typically exclusive for AI training for an agreed term.
• Field of use. The purposes the licensee may use the records for, such as training and evaluating AI models.
• Term. How long the licensed rights last.
• All-in price. One price to the company, with SourceX's fee included and no separate charges, paid once.
• De-identification and redaction. Removing or masking personal and sensitive details under rules agreed with the company before any work begins.
• Delivery. Transfer of prepared records, which happens only after an executed agreement and the company's authorization.
• Right to use vs right to access. Accounting categories for licenses of intellectual property under ASC 606: a right to use IP as it exists when granted is recognized at a point in time, while a right to access IP throughout the license period is recognized over time, as Deloitte's revenue recognition roadmap explains. FASB clarified this licensing guidance in ASU 2016-10, as the Journal of Accountancy reported. Licensing note: how a license is structured can affect when revenue is recognized, so the company should ask its auditors.
• Work made for hire. Under the Copyright Act's definitions section, 17 U.S.C. 101, a work prepared by an employee within the scope of employment, or a commissioned work in listed categories with a signed written agreement. Licensing note: it helps decide whether the company owns the records it proposes to license.
• Referral partner. A person who introduces a company to SourceX. Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company, paid only after the buyer pays and SourceX receives its fee.

Where sell-side and licensing terms collide

The M&A closing checklist turns the right-hand column into named closing tasks.

Illustrative: one word, two promises

Illustrative and fictional: the owner of a 210-person engineering services firm hears exclusive twice in one month. In the LOI, exclusivity means she cannot shop the company for a set number of days. In a draft data license, exclusive means one licensee alone may use a defined slice of the firm's project records for AI training for an agreed term. The first restricts the sale process; the second restricts who else may train on that data. Mixing them up leads owners to fear that a license ties up the company, or advisors to miss that a no-shop may reach the license. The worry that licensing gives the business away is answered in is licensing company data giving away the crown jewels.

Which sellers could license records at all?

Only a subset can. A candidate is a US company that had 50+ full-time employees at peak (contractors excluded), keeps years of records across its systems, holds the rights to them and has an owner or officer able to sign. Owners can test their own fit, without giving contact details, in the company fit checker.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

Next step

If you advise owners through a sale and see clients with years of operational records, register as a partner. More on referrals for deal professionals is on the M&A advisors page.