Jargon BusterCorporate Finance has a splendid collection of slang and jargon. Here are some of the more common terms in current use:
management buy-in (MBI): an external management team buys in to a target company. management buy-out (MBO): the management team buys the company it is running - eg when the company founder retires, or when a plc sells a subsidiary. mergers and acquisitions (M and A): a phrase describing the whole range of activities associated with buy and selling companies. mezzanine finance: may be part of a funding cocktail, it carries higher interest than a term loan; the lender can opt for a small equity stake, or a lump sum premium on exit. Back to the Topnewco: the new company formed through a buy-out, start-up, merger or demerger. non-executive director: a board-level director, without responsibility for day to day running of the company; mandatory for all plcs and for venture backed companies. Brings impartiality and a broader view to company proceedings. Just as liable as executive directors if things go wrong. Back to the TopOFEX: an unregulated matched bargain market established in 1995 by JP Jenkins, authorised by the FSA. About 200 companies are listed on OFEX, mostly small, young companies with a high-tech bent. Admission to OFEX is quicker and much cheaper than AIM or the main lists, but liquidity is poor and stocks are high risk. official list: the London Stock Market's main list (as opposed to AIM or OFEX). OMB: owner managed business Back to the TopP/E: price/earnings ratio - a means of determining the value of a business through a multiple of earnings. plc: a public limited company (not always quoted on the stock market). pre-money valuation: the valuation or total price of a company before the investment. private equity: private equity capital invested in businesses that hasn't come from the public (stock) markets. Also the term that describes the industry that has developed around such investments. Back to the Topquoted company: a company with its share price quoted on a stock exchange index return on investment (ROI): the total percentage increase in capital over the life of the investment. ring master: an intermediary (eg corporate finance adviser) who coordinates the fundraising process. risk capital: see venture capital Back to the TopJargon reproduced from The Culture of Capital, kind permission of Capsica |
