Glossary
Acquisition
The process of one company purchasing another company or its assets.
Amalgamation
A merger where two or more companies combine to form a new entity.
Angel Investor
An affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity
Asset Management
The systematic process of developing, operating, maintaining, and selling assets in a cost-effective manner
Asset Sale
The sale of specific assets of a company rather than the entire business.
Balance Sheet
A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.
Bond
A debt investment where an investor loans money to an entity, which borrows the funds for a defined period at a fixed interest rate.
Bootstrapping
Starting a business with minimal financial resources or capital
Bridge Loan
A short-term loan used until a person or company secures permanent financing or removes an existing obligation
Bull Market
A financial market characterized by rising asset prices and investor optimism.
Buy-Side
Refers to the side of investment banking that deals with acquiring assets on behalf of clients, such as private equity firms or institutional investors.
Buyout
The purchase of a company’s shares in which the acquiring party gains controlling interest of the targeted firm
Capital Expenditure (Capex)
Funds used by a company to acquire, upgrade, or maintain physical assets such as property, buildings, or equipment.
Capital Structuring
The process of determining the mix of debt, equity, and other financing sources to fund a company's operations and growth
Cash Flow
The net amount of cash generated or consumed by a company's operating, investing, and financing activities during a specific period.
Corporate Governance
The system of rules, practices, and processes by which a firm is directed and controlled
Crowdfunding
The practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet
Debt Capital Markets (DCM)
Debt Financing
Raising capital through borrowing money that must be repaid over time, with interest
Divestiture
The partial or full disposal of an asset or business through a sale, exchange, closure, or bankruptcy
Due Diligence
The process of investigating and verifying the financial and operational information of a company in connection with a potential investment or transaction
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
A measure of a company's overall financial performance and is used as an alternative to net income in some circumstances
Entrepreneurship
The process of designing, launching, and running a new business, which is often initially a small business
Equity
Equity Financing
Raising capital through the sale of shares in an enterprise
Exit Strategy
A plan developed by an investor or business owner to liquidate their position in a financial asset or dispose of tangible business assets
Fiduciary Duty
A legal obligation of one party to act in the best interest of another
Financial Modeling
The task of building an abstract representation (a model) of a real-world financial situation
Franchise
The authorization granted by a company to an individual or group enabling them to carry out specified commercial activities
Funding Rounds
The stages through which startups obtain investment to grow the business, often categorized as seed, Series A, B, C, etc
General Partner
A partner in a partnership who has unlimited liability and is active in the day-to-day operations of the business
Greenfield Investment
A type of foreign direct investment where a parent company creates a subsidiary in a different country, building its operations from the ground up
Gross Margin
The difference between revenue and cost of goods sold divided by revenue, expressed as a percentage
Growth Capital
Funds provided to companies to finance their expansion or restructuring
Hedge Fund
An investment fund that engages in a range of strategies to earn active return for its investors
High-Yield Bond
A bond that is rated below investment grade and offers a higher yield due to its higher risk of default
Holding Company
A parent corporation that owns enough voting stock in another corporation to control its policies and management
Hostile Takeover
The acquisition of one company by another without the consent of the target company's management
Initial Public Offering (IPO)
The process through which a private company offers shares to the public for the first time to raise capital
Intellectual Property (IP)
A category of property that includes intangible creations of the human intellect, such as patents, trademarks, copyrights, and trade secrets
Internal Rate of Return (IRR)
A metric used in financial analysis to estimate the profitability of potential investments
Investment Bank
A financial services company or corporate division that engages in advisory-based financial transactions on behalf of individuals, corporations, and governments
Joint Venture
A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task
Junior Debt
Debt that is lower in repayment priority compared to senior debt
Junk Bond
A high-yield, high-risk security, typically issued by a company seeking to raise capital quickly
Just-In-Time (JIT)
An inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process
Key Performance Indicator (KPI)
A measurable value that demonstrates how effectively a company is achieving key business objectives
Kick-off Meeting
The initial meeting of a project team and the client of the project to discuss the role of each team member
Know Your Customer (KYC)
A process of verifying the identity of clients, often used by banks and financial institutions
Knowledge Management
The process of capturing, distributing, and effectively using knowledge within an organization
Letter of Credit (LC)
A letter issued by a bank to another bank to serve as a guarantee for payments made to a specified person under specified conditions
Leveraged Buyout (LBO)
The acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition
Liquidity Ratio
A class of financial metrics used to determine a company's ability to pay off its short-terms debts obligations
Long-Term Debt
Loans and financial obligations lasting over one year
Management Buyout (MBO)
A form of acquisition where a company's existing managers acquire a large part or all of the company
Market Capitalization
The total dollar market value of a company's outstanding shares of stock
Mergers and Acquisitions (M&A)
The consolidation of companies or assets, through various types of financial transactions, to achieve strategic business objectives
Mergers and Acquisitions (M&A)
Microfinance
A category of financial services targeted at individuals and small businesses who lack access to conventional banking and related services
Negotiation
The process by which parties with differing preferences and perspectives attempt to reach an agreement on a matter of mutual interest
Net Present Value (NPV)
The difference between the present value of cash inflows and the present value of cash outflows over a period of time
Non-Disclosure Agreement (NDA)
A legal contract establishing a confidential relationship between parties to protect any type of confidential and proprietary information or trade secrets
Non-Performing Loan (NPL)
A loan in which the borrower is in default and has not made any scheduled payments of principal or interest for some time
Operating Income
A measure of the profit earned from a company's ongoing core business operations
Operational Risk
The prospect of loss resulting from inadequate or failed procedures, systems, or policies
Options Contract
A financial derivative that provides the buyer with the right, but not the obligation, to buy or sell an asset at an agreed-upon price before or at a specific date
Overhead Costs
Ongoing expenses related to operating a business that are not directly associated with creating a product or service
Pitch Deck
A presentation created to provide potential investors with an overview of your business, vision, and financial plans
Preferred Stock
A class of ownership in a corporation with a higher claim on assets and earnings than common stock
Private Equity Funding
Investments made into companies not listed on public
Profit Margin
A measure of profitability calculated as net income divided by revenue
Qualitative Analysis
An analysis method that uses subjective judgment based on non-quantifiable information, such as management expertise, industry cycles, and labor relations
Quantitative Easing (QE)
A monetary policy used by central banks to stimulate the economy by buying long-term securities to increase the money supply and encourage lending and investment
Quick Ratio
A measure of a company's ability to meet its short-term obligations with its most liquid assets
Quorum
The minimum number of members of an assembly or society that must be present at any of its meetings to make the proceedings of that meeting valid
Return on Investment (ROI)
A measure used to evaluate the efficiency or profitability of an investment
Revenue Growth
The increase in a company's sales from one period to the next
Rights Issue
An offer to existing shareholders to purchase additional shares at a discount to the current market price
Risk Management
he process of identification, analysis, and acceptance or mitigation of risk
Seed Funding
The initial capital used to start a business, often coming from the founders' personal assets, friends, and family
Series A Financing
The first significant round of business financing by private equity investors or venture capitalists
Term Sheet
A non-binding agreement that outlines the basic terms and conditions under which an investment will be made
Trade Credit
The credit extended to a company by suppliers who let the company buy now and pay later
Treasury Bonds
Long-term, fixed-interest government debt securities with maturities ranging from 10 to 30 years
Turnaround Strategy
A strategy employed by a company that is experiencing a period of poor performance to reverse its financial decline
Underwriting
The process by which an investment bank guarantees to sell a certain number of securities at a specified price, often used in the context of IPOs.
Underwriting
The process by which an underwriter or insurance company evaluates the risk and exposures of potential clients
Unicorn
A privately held startup company valued at over $1 billion
Unsecured Loan
A loan that is issued and supported only by the borrower’s creditworthiness, rather than by any type of collateral
Utility Token
A digital token issued in an initial coin offering that can be used to purchase goods or services offered by the issuer
Venture Capital
A type of private equity financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential
Vertical Integration
A strategy whereby a company owns or controls its suppliers, distributors, or retail locations to control its value or supply chain
Vesting
The process by which an employee earns the right to keep the company's contribution to their retirement plan, stock options, or benefits, usually over a period of time
Volatility
A statistical measure of the dispersion of returns for a given security or market index, often measured by standard deviation
Warranty
A type of guarantee that a manufacturer or similar party makes regarding the condition of its product
Weighted Average Cost of Capital (WACC)
The average rate that a company is expected to pay to finance its assets, weighted by the proportion of each component of the capital structure
White Paper
An authoritative report or guide that informs readers concisely about a complex issue and presents the issuing body's philosophy on the matter
Working Capital
A measure of a company's operational efficiency and short-term financial health, calculated as current assets minus current liabilities
X-inefficiency
The difference between efficient behavior of businesses assumed or implied by economic theory and their observed behavior in practice
Year-over-Year (YoY)
A method of evaluating two or more measured events to compare the results at one period with those of a comparable period on an annualized basis
Yield
The income return on an investment, such as the interest or dividends received from holding a particular security
Zero-Based Budgeting (ZBB)
A method of budgeting in which all expenses must be justified for each new period, starting from a "zero base
Zero-Coupon Bond
A bond that does not pay interest during its life but is issued at a discount to its face value
Zombie Company
A firm that is unable to cover its debt servicing costs from current profits over an extended period