Glossary

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.

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[collapse title= »Non disclosure agreement » active= »true »]

Guarantee of secrecy signed by the potential buyer in order to protect the information given while the dossier is being studied

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[collapse title= »Working capital requirement »]

(Clients + stock + various short terms assets) – (developers + various short term liabilities)

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[collapse title= »Book Value »]

Value of a company calculated from its equity.

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[collapse title= »Bottom line »]

Net result (last line of the profit and loss account)

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[collapse title= »Business angels »]

Individuals who invest their fortune into businesses during the starting up period or during development. Their personal experience benefits these companies.

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[collapse title= »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…

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[collapse title= »Capital »]

The money invested in a business by shareholders.

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[collapse title= »Seed capital »]

Phase before venture capital, capital inflow to businesses that are starting up, often done by individuals (business angles).

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[collapse title= »Market capitalisation »]

Value of the company obtained by multiplying the spot price (listed on the stock exchange) by the number of shares.

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[collapse title= »Venture Capital »]

Investment of equity or equity linked capital into a company not listed on the stock exchange and intervening before seed capital

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[collapse title= »Closing »]

Final stage of the takeover process, with both participants (vendors and buyers) signing the sales contract

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[collapse title= »Corporate governance »]

Responsability and obligations of the board of directors.

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[collapse title= »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.

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[collapse title= »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…

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[collapse title= »EASDAQ »]

European market specialising in growth value since 1996

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[collapse title= »EBIT »]

Earnings before interest and tax.

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[collapse title= »EBITDA »]

Earnings before interest, tax, depreciation and amortisation.

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[collapse title= »Leverage »]

Multiplier effect for the profitability of equity because of the use of external financing.

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[collapse title= »Earn out »]

Clause with price suppliment paid by the buyer contingent on future results (after the sale).

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[collapse title= »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)

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[collapse title= »Liabilities warranty »]

Guarantee made by the vendor about the amount of equity

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[collapse title= »Holding »]

A company whose main aim is to keep participation in businesses

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[collapse title= »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.

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[collapse title= »Initial Public Offering (IPO) »]

Introduction onto the stock exchange.

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[collapse title= »Intermediary »]

An independent third party (an individual or corporation) acting as a mediator or advisor in the negotiations.

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[collapse title= »Institutional »]

Retirement funds or insurance funds or asset management company. Opposite of private investors or individuals.

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[collapse title= »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.

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[collapse title= »Liquidity »]

Fluidity of the market presenting an offer and a significant demand.

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[collapse title= »Memorandum »]

A document similar to a prospectus, which presents the operation.

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[collapse title= »NASDAQ »]

American growth value market, which inspired the Nouveau Marché (New Market in English) in France and the European Easdaq.

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[collapse title= »NIAT »]

Net income after tax.

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[collapse title= »Nouveau Marché »]

Stock market recently created in Europe in order to allow new technology companies or growing companies to enter onto the stock exchange.

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[collapse title= »NYSE »]

New York Stock Exchange.

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[collapse title= »Shareholders agrrement »]

Contractual agreement which details the relation between a company’s different shareholders or shareholders groups.

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[collapse title= »PER Price – earnings ratio »]

Multiplier of net profit in order to determine the value of the company.

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[collapse title= »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.

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[collapse title= »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…

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[collapse title= »ROCE (return on capital employed) »]

Rate of return of capital employed: EBIT/ invested capital (fixed assets and WCR)

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[collapse title= »Road show »]

Investors’ visit during a trip with many stages.

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[collapse title= »ROI (return on investment) »]

Rate of profitability of equity. Net result/ equity

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[collapse title= »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.

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[collapse title= »Start-up »]

A new company, which is growing quickly.

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[collapse title= »Goodwill »]

Price supplement paid during the acquisition with regards to the book value

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[collapse title= »US GAAP »]

US accounting principles

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[collapse title= »Venture capital »]

The trem is also used to talk about capital investment.

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Actoria International is a firm specializing in the transfer of business (company, SME, pmi ...) in France, Belgium, Luxembourg, Monaco, Switzerland, Spain, Italy, Great Britain, Quebec on sales of SMEs, sales industries, mergers and acquisitions advice for the transmission of a French company. If you're wondering "how to sell my business and quickly find a buyer" then contact Actoria international.

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