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.
Guarantee of secrecy signed by the potential buyer in order to protect the information given while the dossier is being studied
(Clients + stock + various short terms assets) – (developers + various short term liabilities)
Value of a company calculated from its equity.
Net result (last line of the profit and loss account)
Individuals who invest their fortune into businesses during the starting up period or during development. Their personal experience benefits these companies.
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…
The money invested in a business by shareholders.
Phase before venture capital, capital inflow to businesses that are starting up, often done by individuals (business angles).
Value of the company obtained by multiplying the spot price (listed on the stock exchange) by the number of shares.
Investment of equity or equity linked capital into a company not listed on the stock exchange and intervening before seed capital
Final stage of the Takeover process, with both participants (vendors and buyers) signing the sales contract
Responsability and obligations of the board of directors.
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.
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…
European market specialising in growth value since 1996
Earnings before interest and tax.
Earnings before interest, tax, depreciation and amortisation.
Multiplier effect for the profitability of equity because of the use of external financing.
Clause with price suppliment paid by the buyer contingent on future results (after the sale).
Method allowing you to measure the creation of value by differentiating between the operating result and the WACC (weighted average cost of capital)
Guarantee made by the vendor about the amount of equity
A company whose main aim is to keep participation in businesses
This concept concerns the company’s accounts. They must represent the company’s situation in a true, sincere and fair way.
Introduction onto the stock exchange.
An independent third party (an individual or corporation) acting as a mediator or advisor in the negotiations.
Retirement funds or insurance funds or asset management company. Opposite of private investors or individuals.
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.
Fluidity of the market presenting an offer and a significant demand.
A document similar to a prospectus, which presents the operation.
American growth value market, which inspired the Nouveau Marché (New Market in English) in France and the European Easdaq.
Net income after tax.
Stock market recently created in Europe in order to allow new technology companies or growing companies to enter onto the stock exchange.
New York Stock Exchange.
Contractual agreement which details the relation between a company’s different shareholders or shareholders groups.
Multiplier of net profit in order to determine the value of the company.
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.
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…
Rate of return of capital employed: EBIT/ invested capital (fixed assets and WCR)
Investors’ visit during a trip with many stages.
Rate of profitability of equity. Net result/ equity
Business plan synthesis, detailing the main points of the project in 10-12 documents (PowerPoint), giving the opportunity for a 15 minute oral presentation.
A new company, which is growing quickly.
US accounting principles
The trem is also used to talk about capital investment.
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