Squad initially merry after drink (4)
I believe the answer is:
team
'squad' is the definition.
('team' can be a synonym of 'squad')
'initially merry after drink' is the wordplay.
'initially' suggests taking the first letters.
'after' says to put letters next to each other.
'drink' becomes 'tea' (tea is a kind of drink**).
The initial letter of 'merry' is 'm'.
'm' after 'tea' is 'TEAM'.
(Other definitions for team that I've seen before include "(Sports) side" , "A set of players or workers" , "(Football) side" , "Side in sporting event" , "One side in a game" .)