Transaction Services Vocabulary for Interviews
The essential TS vocabulary for interviews: definitions and usage of the most important terms in Financial Due Diligence and M&A.
One of the quickest ways to signal readiness for a Transaction Services role is to speak the language of TS fluently. Conversely, using terms incorrectly — or using hedge words that show you are not sure — undermines otherwise strong answers. This guide covers the core vocabulary you need for any TS interview.
Core FDD Terms
Quality of Earnings (QoE): The analytical process of assessing the sustainability and representativeness of a company's reported earnings, primarily through EBITDA adjustments.
Adjusted / Normalised EBITDA: Reported EBITDA modified by non-recurring, run-rate and pro forma adjustments to reflect the underlying recurring earning power of the business.
EBITDA Bridge: A schedule reconciling reported EBITDA to adjusted EBITDA, listing every adjustment with its description and financial impact.
Non-recurring item: A cost or revenue item that is not expected to repeat in future periods and that distorts the comparability of earnings.
Run-rate adjustment: An annualisation of a cost or revenue change that occurred mid-period, to reflect the full-year impact.
Pro forma adjustment: An adjustment for a structural change (acquisition, disposal, new contract) not yet fully reflected in historical results.
Deal Mechanics Terms
Enterprise Value (EV): The total value of a business, before any balance sheet adjustments. Typically = EBITDA × multiple.
Equity Value: What shareholders receive = EV − Net Debt − Debt-Like Items +/− NWC Adjustment.
Net Debt: Gross financial debt (loans, leases, bonds) minus cash and cash equivalents.
Debt-like item: A balance sheet liability that is economically equivalent to debt but not classified as financial debt (e.g. pension deficit, restructuring provision).
NWC Target: The agreed level of net working capital that the seller delivers at closing, embedded in the SPA.
Completion Accounts: A mechanism where the deal price is adjusted post-closing based on actual net debt and NWC at the closing date.
Locked-Box: A mechanism where the price is fixed at signing based on a historical reference balance sheet, with no post-closing adjustment.
Earn-out: A contingent element of deal consideration payable to the seller if agreed performance targets are met post-closing.
Leakage: In a locked-box deal, a payment from the target to the seller (or related parties) between the locked-box date and closing that is not permitted by the SPA.
Due Diligence Process Terms
Information Request List (IRL): The list of documents and data requested by the FDD team from the target company.
Data room: A secure (usually virtual) repository of documents provided by the seller for buyer due diligence review.
Management Q&A: A session where the FDD team meets management to clarify issues identified during fieldwork and challenge proposed adjustments.
Datapack: A pre-prepared financial information package provided by the seller to accelerate buyer due diligence.
Vendor Due Diligence (VDD): A sell-side FDD report commissioned by the seller and made available to potential buyers.
SPA Terms
Warranty: A statement of fact made by the seller in the SPA, breach of which gives the buyer a claim.
Indemnity: A one-way protection in the SPA for a specific known risk, not subject to the general warranty regime.
W&I Insurance: Warranty and Indemnity insurance, an insurance product covering warranty claims, increasingly used in PE-backed M&A.
Conclusion
Using these terms correctly and confidently in an interview demonstrates that you understand deals — not just accounting theory. Practice using them in full sentences before your interview.
The Transaction Services Interview Programme (€119.99, one-time) is designed around the real vocabulary and analytical frameworks of TS professionals. Build your fluency before your interview. Enrol today.