Pardon, a what...?
Corporate Finance is riddled with confusing acronyms, abbreviations and terminology.
Our member firms don't believe in trying to 'blind you with science'. We all talk in plain language so you understand what we mean. Here are some common terms you may hear used when corporate finance issues are discussed:
- ABLs - asset based lenders or asset backed lenders, the financiers who offer facilities directly based upon the level of your trade debtors, stock or fixed assets eg invoice discounting or asset finance
- BIMBO - a combination made up of a team with both MBO & MBI candidates
- Covenants - conditions set by a lender which must be abided by for the finance facilities to remain in place, can be financial or non-financial elements
- CF - corporate finance, see "What is Corporate Finance"
- DD - Due diligence, can be legal, commercial & financial and is undertaken by a potential purchaser to identify key risks of acquiring a business, or by a lender before agreeing finance
- Debenture - a form of legal security offered to a bank by a company
- Gearing - a ratio of debt borrowings compared to total assets in a company
- HNW or HNWI - high net worth individual, a wealthy person!
- IM - Information Memorandum, the document prepared by a vendor who is selling their business, containing key facts about that business required by any potential purchasers
- Interest cover - a ratio of interest payable compared to profit before interest
- IP - initial percentage, the amount a financier will offer you against your assets - usually a term found in invoice discounting or factoring arrangements
- IPO - initial public offering, when a business first 'floats' on a listed public market
- MBI - when an external individual buys the shareholders out & then takes over the business
- MBO - management buy out, when an existing employee buys their employer's business
- NDA - Non-Disclosure Agreement, a confidentiality letter which a vendor should ask a potential purchaser to sign before disclosing commercially sensitive information about their business
- PG - personal guarantee, a form of security offered to a bank by an individual, usually the business owner to secure some of the business' borrowings
- SFLGS - Small Firms Loan Guarantee Scheme, a DTI backed scheme for businesses less than 5 years old, to partly secure their borrowings (many other conditions involved)
- SPA - share purchase agreement, or sales & purchase agreement, the main legal document involved in the purchase/sale of a business
- VC - venture capitalist, an institution providing private equity funding in exchange for shares in a company
- Warranties & Indemnities - the statements of fact made by a vendor in a SPA which a purchaser relies upon
- Whitewash - a procedure undertaken by an auditor to satisfy the 'financial assistance' conditions in the Companies Act, required in some instances, for example when a company secures certain forms of finance or conducts certain share transactions
If your advisor, lawyer or accountant, or lender is regularly using this sort of terminology and isn't explaining themselves to you clearly, you are using the wrong advisor or lender!
Find someone you can relate to, who speaks your language, but still has all the specialist skills and contacts you require.
The member firms of The Corporate Finance Network will impress you, but will also speak to you in terms you can understand. For more information Contact Us or to find your local firm please look at the About Us pages.