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.
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.
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Locked-Box: A mechanism where the price is fixed at signing based on a historical reference balance sheet, with no post-closing adjustment.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.
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.
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.
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.
Hundreds of candidates prepared their interviews with this programme. Those who landed the role have one thing in common: they worked the cases before walking into the room.
