Below, you will find a list of technical terms used by professionals during a company transfer
Many technical terms have an Anglo-Saxon origin and do not have an equivalent in French.
Non disclosure agreement
Guarantee of secrecy signed by the potential buyer in order to protect the information given while the dossier is being studied
Working capital requirement
(Clients + stock + various short terms assets) – (developers + various short term liabilities)
Book Value
Value of a company calculated from its equity.
Bottom line
Net result (last line of the profit and loss account)
Business angels
Individuals who invest their fortune into businesses during the starting up period or during development. Their personal experience benefits these companies.
Business Plan
The company’s development plan for 3 to 5 years with detailed commentary of the commercial domains, competitions, products, techniques, production methods, investments, IT, workforce, financing...
Capital
The money invested in a business by shareholders.
Seed capital
Phase before venture capital, capital inflow to businesses that are starting up, often done by individuals (business angles).
Market capitalisation
Value of the company obtained by multiplying the spot price (listed on the stock exchange) by the number of shares.
Venture Capital
Investment of equity or equity linked capital into a company not listed on the stock exchange and intervening before seed capital
Closing
Final stage of the takeover process, with both participants (vendors and buyers) signing the sales contract
Corporate governance
Responsability and obligations of the board of directors.
Data Room
All of information about a company being sold is available in a room (at a lawyer’s office). The potential buyers can consult these under certain conditions (right to make photocopies or not). This happens when the buyer knows the company (they are a competitor, for example), and it is not possible for them to visit.
Due-diligence
All of the research and control of information measures allowing the buyer to base their judgement on assets and liabilities, the activity, the financial situation, the results, the company’s perspectives...
EASDAQ
European market specialising in growth value since 1996
EBIT
Earnings before interest and tax.
EBITDA
Earnings before interest, tax, depreciation and amortisation.
Leverage
Multiplier effect for the profitability of equity because of the use of external financing.
Earn out
Clause with price suppliment paid by the buyer contingent on future results (after the sale).
Economic value added
Method allowing you to measure the creation of value by differentiating between the operating result and the WACC (weighted average cost of capital)
Liabilities warranty
Guarantee made by the vendor about the amount of equity
Holding
A company whose main aim is to keep participation in businesses.
True and fair view
This concept concerns the company’s accounts. They must represent the company’s situation in a true, sincere and fair way.
Initial Public Offering (IPO)
Introduction onto the stock exchange.
Intermediary
An independent third party (an individual or corporation) acting as a mediator or advisor in the negotiations.
Institutional
Retirement funds or insurance funds or asset management company. Opposite of private investors or individuals.
Letter of intent or Term sheet
This letter is sent by the potential buyer to business shareholders or the representative at the end of due diligence. It stipulates the price and the sales conditions.
Liquidity
Fluidity of the market presenting an offer and a significant demand.
Memorandum
A document similar to a prospectus, which presents the operation.
NASDAQ
American growth value market, which inspired the Nouveau Marché (New Market in English) in France and the European Easdaq.
NIAT
Net income after tax.
Nouveau Marché
Stock market recently created in Europe in order to allow new technology companies or growing companies to enter onto the stock exchange.
NYSE
New York Stock Exchange.
Shareholders agrrement
Contractual agreement which details the relation between a company’s different shareholders or shareholders groups.
PER Price - earnings ratio
Multiplier of net profit in order to determine the value of the company.
Pre-closing
Exchange of legal documentation between future shareholders, vendors and their advisors which will be signed during the closing. This period helps to fit the documents to the necessary requirements of each of the parties.
Accounting principles
Rules and principles guiding accounting: - True and fair view- evaluation of stock principles - principles of stock – evaluation – non compensation – principle of conservatism – the consistency principle – the historical cost principle – the continuity assumption – the separate-entity assumption...
ROCE (return on capital employed)
Rate of return of capital employed: EBIT/ invested capital (fixed assets and WCR)
Road show
Investors’ visit during a trip with many stages.
ROI (return on investment)
Rate of profitability of equity. Net result/ equity
Slide show
Business plan synthesis, detailing the main points of the project in 10-12 documents (PowerPoint), giving the opportunity for a 15 minute oral presentation.
Start-up
A new company, which is growing quickly.
Goodwill
Price supplement paid during the acquisition with regards to the book value
US GAAP
US accounting principles
Venture capital
The trem is also used to talk about capital investment.
