Drall
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Glossary

Clear definitions of the terms that matter in consulting, M&A, restructuring and AI.

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Consulting & Strategy

15 terms
Benchmarking
The systematic comparison of a company with competitors or industry best performers based on metrics, processes or strategies.
In consulting: A client’s cost structure is compared with five direct competitors to make savings potential visible.
Business case
The comparison of costs, benefits and risks of a planned measure. It shows whether an investment is worthwhile and when it pays off.
In consulting: Before entering a new country, a business case with revenue potential, investments and timeline is prepared.
Deliverable
The concrete work product a consulting firm hands over to the client, e.g. a presentation, an expert opinion, a model or a report.
In consulting: The quality of the deliverable determines follow-up work. It has to be in the firm’s corporate design and properly evidenced.
Engagement
A consulting project or mandate, from the commissioning to the handover of the results.
In consulting: A typical strategy engagement lasts 6–12 weeks and includes analysis, workshops and a final presentation.
Executive summary
The summary of the most important results and recommendations at the beginning of a presentation or report. It addresses decision-makers who do not read all the details.
In consulting: Often the most important page of a deliverable. Many board members read only this.
Fixed fee vs. day rate
With a day rate, billing is based on effort; with a fixed fee, the client pays a pre-agreed amount for a defined result. Clients increasingly demand fixed fees.
In consulting: With fixed fees, the firm bears the effort risk. Every hour saved directly increases the project margin.
Hypothesis-driven approach
A way of working in which possible answers (hypotheses) are formulated at the start of a project and then tested in a targeted way, instead of collecting all the data first.
In consulting: “The revenue decline is due to price pressure in the core market” is set up as a hypothesis and confirmed or refuted with data.
Issue tree
A tree structure that breaks a complex question down into smaller, testable sub-questions.
In consulting: “How do we increase profit?” is split into revenue (price, volume) and costs (fixed, variable). Each branch is analysed individually.
Kick-off
The opening meeting of a project, in which goals, approach, timeline, roles and contacts are agreed with the client.
In consulting: A good kick-off clarifies expectations early and prevents later discussions about project scope.
MECE
Stands for “mutually exclusive, collectively exhaustive”: a breakdown should not overlap and at the same time should be complete.
In consulting: Splitting customer segments by region is MECE. “Key accounts” and “customers in Bavaria” side by side is not, because they overlap.
Proposal / RFP
The proposal is a consulting firm’s offer for a project. An RFP (request for proposal) is a formal tender in which a company invites several consulting firms to submit proposals.
In consulting: Proposals cost a lot of unpaid time. Those who write convincing proposals faster win more engagements.
Pyramid Principle
A method that goes back to Barbara Minto: first comes the key message, below it the supporting arguments, below them the evidence.
In consulting: The basis for presentations and executive summaries. Every slide starts with a clear statement as its title.
Steering committee
The decision-making body of a project, usually made up of the client’s board or management. It regularly takes the most important directional decisions.
In consulting: Presentations for the steering committee have to be particularly precise and evidenced. This is where decisions are made.
Utilization
The share of working time that consultants spend on billable client projects. It is one of the most important metrics for a consulting firm’s profitability.
In consulting: Time spent on proposals, research or internal alignment lowers utilization, even though it is necessary for the business.
Workstream
A clearly delimited part of a larger project with its own team and its own goals.
In consulting: A transformation project can, for example, have the workstreams strategy, organisation and cost reduction running in parallel.

M&A & Due Diligence

15 terms
Buy-and-build
A strategy in which an investor buys a company as a platform and then deliberately acquires smaller companies in the same industry (add-ons) to build scale and market share.
In consulting: For a PE fund, a longlist of possible add-on candidates is created and assessed by size, region and strategic fit.
Carve-out
The separation of a business unit from a group in order to sell it or continue it independently. Transitional agreements for IT, HR or procurement are often made for this.
In consulting: Consultants clarify which functions the separated unit will need on its own in future and what that costs.
Commercial due diligence (CDD)
The review of a target company’s market and competitive position: market size and growth, competitors, customers, business plan. It answers the question of whether the planned revenues are realistic.
In consulting: A typical engagement of strategy consultancies for PE funds, usually under great time pressure within a few weeks.
Data room (virtual data room)
A protected online platform on which the seller provides all relevant documents: contracts, financial figures, HR and legal documents. Access is logged.
In consulting: Hundreds of documents have to be screened in a short time. Every finding should point to the specific location in the data room.
Equity story
The growth and value narrative with which a company is presented to buyers or investors: why is it attractive, and how is its value supposed to rise in future?
In consulting: In a sale, the consulting firm helps to underpin the equity story with market and competitor data.
Financial due diligence (FDD)
The review of a target company’s financial position: quality of earnings, liquidity, working capital, debt. It is usually carried out by auditors or specialised transaction advisors.
In consulting: The CDD provides the market view, the FDD the numbers view. Both have to fit together.
Information memorandum (IM)
A detailed sales document about the target company that interested parties receive after signing a confidentiality agreement. Before that there is usually only an anonymous short overview (teaser).
In consulting: The IM is often the first starting point for analysing an acquisition candidate.
Letter of intent (LOI)
A declaration of intent in which buyer and seller record the key points of a planned transaction, such as price range, structure and timeline. It is usually not legally binding, except for individual points such as confidentiality or exclusivity.
In consulting: After the LOI, the in-depth due diligence usually begins.
Longlist / shortlist
The longlist is a broad list of possible target companies or buyers, the shortlist the selection of the most attractive candidates narrowed down by fixed criteria.
In consulting: From a longlist of 200 companies, 15 candidates for outreach are selected based on revenue, region and business model.
Non-disclosure agreement (NDA)
A confidentiality agreement that interested parties sign before they receive confidential information about a company.
In consulting: Consulting firms and their tools are also subject to the NDA. Client data may therefore only be processed in secure environments.
Q&A process
The structured exchange of questions and answers between buyer and seller during the due diligence, usually organised via the data room.
In consulting: Good questions save time. Recognising gaps in the documents early speeds up the entire process.
Red-flag review
A shortened due diligence that focuses only on possible “deal breakers”, i.e. risks that could prevent a transaction or significantly reduce the price.
In consulting: Often the first step within a few days, before an investor invests in a full due diligence.
Share purchase agreement (SPA)
The contract by which the shares in the target company are sold. It regulates purchase price, warranties and conditions for closing.
In consulting: Findings from the due diligence flow into warranties and price adjustments in the SPA.
Synergies
The additional benefits that a merger of two companies is supposed to create, such as lower costs through joint purchasing or higher revenue through cross-selling.
In consulting: Synergies are estimated before the transaction and implemented and tracked in the integration after the purchase.
Vendor due diligence (VDD)
A due diligence that the seller commissions itself and makes available to potential buyers. It speeds up the sales process and reduces surprises.
In consulting: A growing business area for consulting firms, because sellers want to back up the equity story with an independent market analysis.

Restructuring & Turnaround

15 terms
Covenants
Agreed financial ratios in loan agreements, e.g. a maximum level of debt in relation to earnings. If they are breached, the bank can terminate or renegotiate loans.
In consulting: An impending covenant breach is often the trigger for banks to demand a restructuring opinion.
Crisis stages
The typical phases of a corporate crisis under IDW S6: stakeholder crisis, strategy crisis, product and sales crisis, earnings crisis, liquidity crisis and insolvency.
In consulting: The earlier the crisis is recognised, the more options for action there are. The restructuring concept has to address all stages already passed through.
Debtor in possession (Eigenverwaltung)
An insolvency procedure under German law in which management stays in office and restructures the company itself under the supervision of a custodian, instead of appointing an insolvency administrator.
In consulting: Restructuring advisors support management with planning, measures and communication with creditors.
Duty to file for insolvency (Insolvenzantragspflicht)
The statutory duty of management under German law to file for insolvency in good time in case of illiquidity or over-indebtedness: at the latest after three weeks in case of illiquidity, after six weeks in case of over-indebtedness. Violations risk personal liability.
In consulting: Continuously reviewing the filing duty is mandatory in every restructuring. It determines the time window for all measures.
German restructuring framework (StaRUG)
The German Corporate Stabilisation and Restructuring Act, in force since 2021. It enables a restructuring outside of insolvency when illiquidity is imminent, even against the resistance of individual creditors by majority vote.
In consulting: The StaRUG restructuring plan is an alternative to insolvency and requires careful creditor analysis and planning.
Going-concern forecast (Fortführungsprognose)
The assessment of whether a company can, with predominant probability, continue its business in the forecast period, above all whether it remains solvent.
In consulting: In the case of balance-sheet over-indebtedness, a positive going-concern forecast can be decisive for whether an insolvency filing is required.
IDW S6
The standard of the Institut der Wirtschaftsprüfer (IDW) setting out the requirements for restructuring concepts. In Germany it is the benchmark when banks and investors decide on further financing.
In consulting: An opinion under IDW S6 analyses causes of the crisis, crisis stage, target picture, measures and an integrated plan.
Illiquidity (Zahlungsunfähigkeit)
The most common ground for insolvency: the company can no longer meet its due payment obligations. To be distinguished from this is a merely short-term payment hold-up.
In consulting: Liquidity planning shows whether a gap can be closed in the short term or whether illiquidity already exists.
Liquidity planning
The planning of all cash inflows and outflows for the coming weeks and months. In crises it is often run as a rolling 13-week plan.
In consulting: Short-term liquidity planning shows whether and when the money runs out, and is the basis for every immediate measure.
Over-indebtedness
A ground for insolvency: assets no longer cover liabilities, and continuation over the next twelve months is not predominantly probable.
In consulting: Balance-sheet over-indebtedness alone does not yet trigger the filing duty if there is a positive going-concern forecast.
Protective shield proceedings (Schutzschirmverfahren)
A special procedure under German law in debtor in possession, in which the company gets up to three months to draw up an insolvency plan. Prerequisite: it is not yet illiquid, and the restructuring is not obviously hopeless.
In consulting: The procedure requires a certificate from an experienced expert confirming exactly these prerequisites.
Restructuring feasibility (Sanierungsfähigkeit)
A company is considered capable of being restructured if it is able to continue as a going concern and can become sustainably competitive and profitable again through the planned measures.
In consulting: Confirming restructuring feasibility is the central result of a restructuring opinion.
Restructuring opinion
An expert opinion that analyses the crisis, develops a restructuring concept and assesses restructuring feasibility. In Germany usually prepared under IDW S6.
In consulting: Restructuring opinions are produced under great time pressure and have to evidence every assumption, because banks and investors base their financing decisions on them.
Target picture of the restructured company
The target picture of what the company should look like after a successful restructuring: business model, market, organisation and competitive advantages.
In consulting: The target picture is a core component of an IDW S6 opinion. All measures have to contribute to it.
Turnaround
The successful return of a company from crisis to sustainable profitability.
In consulting: A turnaround programme usually includes cost reduction, portfolio clean-up and strengthening of the core business.

AI & LLMs for Consultants

15 terms
Agent
An AI system that completes a task independently in several steps: it plans, searches for information, analyses it and produces a result.
In consulting: An agent researches a client’s ten largest competitors and summarises their positioning in a table.
AI Act (EU AI Regulation)
The European regulation that governs the use of AI by risk level. For most consulting firms, the transparency obligations under Article 50 are the most relevant, which apply from August 2026 according to the current schedule.
In consulting: Anyone who publishes AI-generated content or lets clients interact with an AI chat may have to label it.
Context window
The amount of text an AI model can take into account at once, i.e. questions, documents and the conversation so far combined.
In consulting: A large data room usually does not fit into the context window completely and therefore has to be searched in a targeted way (see RAG).
Data residency / EU hosting
Indicates in which country or region data is stored and processed. What matters is whether this applies both to the stored data and to the processing by the AI model.
In consulting: In M&A or restructuring engagements, clients often require that their data does not leave the EU.
Embedding
A numerical representation of text with which an AI can compare the meaning of content. Embeddings make it possible to search large document sets by meaning instead of just by keywords.
In consulting: A search for “termination risks” also finds contract clauses in which the word does not appear at all.
Hallucination
An answer that sounds plausible but is made up or wrong, such as a non-existent study or a wrong number.
In consulting: An invented market size in a steering committee presentation is a liability risk. That is why every statement needs a source.
Human-in-the-loop
A working principle in which humans review and approve AI results at defined points before work continues.
In consulting: The project lead approves the hypotheses before the AI starts the analysis, and reviews the result before it is sent to the client.
Large language model (LLM)
An AI model trained on large amounts of text that can understand and generate language. Well-known examples are GPT, Claude and Gemini.
In consulting: The LLM is the “engine”. What matters for good results is how it is integrated into the workflows.
Model-agnostic
Software that can work with different AI models instead of being tied to one provider.
In consulting: For text drafts a different model may be better than for number analyses. You stay independent of a single provider.
Multi-agent system
Several specialised AI agents that share a task, e.g. one for planning, one for research, one for analysis and one for writing.
In consulting: Much like a project team: everyone takes on their part, and in the end there is one joint deliverable.
Prompt
The instruction or question you give to an AI. The quality of the result depends heavily on how precisely the prompt is worded.
In consulting: Without guidelines, every consultant words their prompts differently, and result quality fluctuates accordingly. Predefined workflows ensure consistent quality.
RAG (retrieval-augmented generation)
A method in which the AI first looks up suitable passages from your own documents and bases its answer on them.
In consulting: The AI answers questions about a data room based on the actual documents, not from its general knowledge.
Source tracing (source references)
Every statement of the AI is linked to the place it comes from, e.g. document, page or web page.
In consulting: If asked “Where does this number come from?” in the steering committee, you can show the source with one click.
Token
The smallest unit of text an AI model works with, usually a word or part of a word. Usage costs are also calculated by tokens.
In consulting: Long documents and detailed analyses consume more tokens and therefore cost more.
Zero training (no training on customer data)
A provider’s commitment not to use entered data to train its AI models. Ideally this is regulated by contract, e.g. in the data processing agreement.
In consulting: Client data must not flow into a model that other customers also use. This is a basic prerequisite for use in sensitive engagements.

Drall Terms

12 terms
Agent team
Four specialised AI agents that accompany consultants through a project: the Planner structures the question and the work plan, the Researcher does the research, the Analyst evaluates, the Writer creates drafts.
In practice: Like a well-rehearsed project team. The consultant steers, the agents take over the groundwork.
Audit log
A log of the relevant actions in Drall, e.g. access and changes. It makes it traceable who did what and when.
In practice: Helps with internal reviews and with clients’ security questions.
Consulting Operating System
Drall’s positioning: not a single AI tool, but a working environment for the whole consulting project, from the briefing to the finished deliverable. The consulting firm leads the project and keeps the client relationship, Drall takes over the groundwork.
In practice: Drall empowers consulting firms but never appears itself towards their clients.
Data Room
The area in Drall where a project’s client documents are stored. Drall automatically links statements to the matching evidence passages in these documents.
In practice: In a due diligence, every finding can be traced back to its location in the document with one click.
EU-only routing
An option in which AI requests run exclusively via models operated in the EU, e.g. via Microsoft Foundry in Germany.
In practice: For engagements in which no data may leave the EU. Currently available as an enterprise option.
Isolate & Confidential
Settings per project with which particularly sensitive engagements can be shielded from the rest of the firm’s knowledge and access can be restricted.
In practice: An M&A engagement stays completely separate from the firm’s other projects.
Knowledge base
The central, private firm knowledge in Drall, made up of projects, documents and insights. It grows with every project, while client data stays separated.
In practice: The next project does not start from zero. Methodological knowledge stays in the firm, even when employees leave.
Playbook
A proven workflow for a specific project type, e.g. market entry, growth strategy, commercial due diligence, cost reduction, go-to-market, operating model or proposal creation. The playbook sets out the steps that agents and consultants go through together.
In practice: Instead of every consultant writing their own prompts, the whole team works according to the same proven approach, from intern to partner.
Quality gate
A defined checkpoint in the project at which a consultant approves the interim result, redirects it or has the AI revise it before work continues.
In practice: No statement makes it into a deliverable unchecked. Responsibility stays with the consultant (see human-in-the-loop).
Tenant isolation
The strict technical separation of the data of different Drall customers. With every database query it is checked that only data of the own firm is visible.
In practice: Your firm’s data is not accessible to any other firm.
Token packages
Allowances for AI usage that are booked in addition to the base fee and user licences. Consumption is recorded per project.
In practice: Partners see what AI usage costs in a project and can compare it with the project margin.
Work trail
The traceable history of a project: which steps agents and consultants took and on what basis a result came about.
In practice: When a client asks how a recommendation came about, the path to it can be shown.