Glossary Archive - Astria LLC

Accretion/Dilution Analysis

An analysis designed to show the potential impact on a company's earnings per share assuming a variety of funding scenarios.

Acquisition

The process of one company purchasing another company's assets, shares, or both.

Acquisition Strategy

Assisting in identifying, evaluating, and executing a successful acquisition that aligns with the business's strategic goals.

Add-backs

Expenses that can be added back to a company's profits when calculating EBITDA.

Advisory Services

Consulting services offered by professionals with expertise in specific areas, such as finance or business operations.

Alternative Investments

Assets that are not traditional stocks, bonds, or cash, such as private equity or real estate.

A clause in an option, security, or merger agreement that gives the investor the right to maintain his or her percentage ownership of a company by buying a proportional number of shares of any future issue of the security.

Arbitrage

Buying and selling the same asset in different markets to take advantage of a price discrepancy.

Asset Allocation

The process of diversifying investments among different asset classes to manage risk and return.

Asset Purchase

An acquisition in which a buyer acquires specific assets and liabilities of a company.

Asset Sale

A type of business sale where the buyer purchases individual assets and liabilities of the business, such as equipment, licenses, customer lists, and inventory, but not the legal entity.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholder's equity at a specific point in time.

Bear Market

A condition of a financial market in which prices are falling or are expected to fall.

Bridge Financing

A short-term loan that provides immediate cash flow until the company can secure more permanent financing.

Bull Market

A condition of a financial market in which prices are rising or are expected to rise.

Business Acquisition Service

A service provided by professional advisors who assist clients in acquiring businesses. The service often includes identifying potential acquisition targets, performing due diligence, valuing the target business, and negotiating the purchase.

Business Brokerage

Acting as a facilitator between a seller and buyer of a small business to guide them through the buying or selling process.

Business Disposal

Assisting in the process of selling, closing, or liquidating a business in a manner that maximizes value and minimizes risk.

Business Disposal Service

A professional service that helps business owners in the process of selling, liquidating, or otherwise disposing of their businesses.

Business Divestiture

Guiding business owners through the process of selling off a portion of their company or a subsidiary.

Business Exit

The act of an owner relinquishing control or ownership of a business, whether through sale, closure, or other methods.

Business Exit Plan Development

Creating a strategic plan to exit a business that addresses all aspects, including timing, finances, and successor planning.

Business Exit Solution

A strategic plan developed for business owners to exit their businesses in a manner that maximizes the value of the business and achieves the owner's personal and financial goals. This could be through a sale, merger, acquisition, or other strategic transactions.

Business Liquidation

Guiding the process of selling a company's assets, paying off debts, and closing the business in an orderly and legal manner.

Business Owner Exit Coaching

Providing coaching services to guide business owners through the emotional and financial aspects of exiting their business.

Business Sales Process

Guiding owners through the step-by-step process of selling a business, from valuation to negotiation, due diligence, and closing.

Business Succession Strategies

Developing strategies to ensure a smooth transition of business ownership and leadership.

Business Transition Service

A professional service that assists business owners in planning and managing the transition of business ownership and control. This can include succession planning, business exit strategies, and management buyouts.

Business Valuation

The process of determining the economic value of a business or company.

Business Valuation Service

A professional service that determines the economic value of a business or company. This service is often used by business sellers, buyers, and investors to determine the price they are willing to pay or accept to initiate a sale of a business.

Buyout Planning

A strategy for buying out the business's ownership from other partners or shareholders, often used in succession planning.

Capital Expenditure

Funds spent by a company to acquire or upgrade physical assets.

Capital Expenditure (CapEx)

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment.

Capital Gain

The increase in value of an investment, realized when the asset is sold.

Capital Stack

The total capital invested in a project, including all types of investment, from senior secured debt to common equity.

Capital Structure

The mix of debt and equity financing a firm uses to fund its operations and growth.

Carve-Out

The sale or spin-off of a division, business unit, or subsidiary to another company or investor.

Cash Conversion Cycle

A measure of how efficiently a company converts its inventory and other resources into cash flows.

Cash Flow

The net amount of cash and cash-equivalents being transferred in and out of a business.

Clawback Provision

A clause that is typically included in venture capital contracts, which states that the entrepreneur will have to return money to the investors in case of a less than optimal exit.

Closing

The final step in the M&A process, where the transaction is completed, and ownership is transferred.

Closing Process Management

Overseeing all the steps that must be taken to legally close a business transaction, ensuring a smooth and successful deal closure.

Collateral

An asset that a borrower offers to a lender to secure a loan.

Confidential Information Memorandum (CIM)

A document prepared by a seller to provide potential buyers with an overview of the business.

Confidentiality Management

Safeguarding sensitive information during the transaction process to protect the client's interests.

Contingent Liability

A potential financial obligation that depends on a future event occurring or not occurring.

Control Premium

An additional amount paid by a buyer to acquire a controlling interest in a company.

Corporate Governance

The system of rules, practices, and processes by which a firm is directed and controlled.

Cost of Capital

The return a company needs to provide to its investors (both debt and equity).

Credit Rating

An evaluation of a potential borrower's ability to repay debt, based on their credit history and financial status.

Cross-Border M&A

Mergers and acquisitions that involve companies in different countries.

Data Room

A secure online platform for sharing confidential documents during the due diligence process.

Deal Flow

The rate at which business proposals and investment pitches are being received.

Deal Negotiation

Assisting clients in negotiating the terms and conditions of a deal to ensure they achieve their desired outcome.

Deal Structuring

The process of arranging the elements of a business deal, including the terms of the transaction, pricing, and financing.

Debt Financing

Funding a business through borrowing money, typically in the form of loans or bonds.

Debt Restructuring

A process that allows a private or public company, or a sovereign entity facing cash flow problems and financial distress, to reduce and renegotiate its delinquent debts to improve or restore liquidity.

Dilution

A reduction in the ownership percentage of a company's shareholders as a result of new shares being issued.

Discounted Cash Flow (DCF)

A valuation method that estimates the value of an investment based on its expected future cash flows.

Distressed Assets

Assets that are sold at a significant discount due to the company's bankruptcy or potential bankruptcy.

Distressed Securities

Securities of companies that are experiencing financial or operational distress, default, or are under bankruptcy.

Divestiture

The sale or disposal of a company's assets, divisions, or subsidiaries.

Drag-along Rights

A right that enables a majority shareholder to force a minority shareholder to join in the sale of a company.

Due Diligence

A comprehensive investigation of a company's financials, operations, and legal standing during the M&A process.

Due Diligence Assistance

Supporting clients in conducting a comprehensive appraisal of a business or its assets for sale to discover any potential issues or benefits.

Due Diligence Checklist

A comprehensive list of necessary items to review during a M&A transaction, including financial records, contracts, customer information, and more.

Earn-out

A deal structure where a portion of the purchase price is contingent upon the target company's future performance.

EBIT

Earnings Before Interest and Taxes - a measure of a company's profitability.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization - a measure of a company's operating performance.

Employee Stock Ownership Plan

A program allowing employees to own shares in the company they work for.

Enterprise Value (EV)

Total value of a business, including its equity, debt, and excluding its cash and cash equivalents.

Equity Financing

Raising capital through the sale of ownership shares in a company.

Equity Stake

Ownership interest in a company, represented by the shares of stock owned by the shareholder.

Equity Value

The value of a company available to owners or shareholders. It is the enterprise value plus all cash and cash equivalents, short and long-term investments, and less all short-term debt, long-term debt and minority interests.

Exchange-Traded Fund (ETF)

An investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally aims to track the performance of a specific index.

Exit Planning Consultation

A professional service where advisors help business owners devise a strategy to exit their business, aiming to maximize the business value and ensure a smooth transition.

Exit Strategy Planning

Helping business owners develop a plan to sell, close, or pass on their business to achieve their goals and secure their financial future.

Expedited Business Sales

Providing services to accelerate the process of selling a business while still ensuring a fair and optimal transaction.

Fair Market Value

The price at which an asset would change hands between a willing buyer and seller.

Fairness Opinion

An assessment provided by a financial service firm concerning the fairness of the terms and conditions of a merger, acquisition, buyback, spin-off, or privatization.

Family Office

A private entity that manages the wealth and investments of a single family or multiple families, providing services such as financial planning, asset management, and estate planning.

Family Succession Planning

Assisting families in planning the transition of a business to the next generation while minimizing tax liability and family conflict.

Fast Business Selling Service

A professional service that helps business owners sell their businesses quickly. This is often achieved by having a wide network of potential buyers and efficient processes for valuing and marketing businesses.

Financial Buyers

Engaging entities that are interested in acquiring a business primarily for financial return, such as private equity firms and hedge funds.

Financial Leverage

The use of borrowed money to increase the potential return on an investment.

Financial Statements

Reports that provide an overview of a company's financial performance, including the income statement, balance sheet, and cash flow statement.

Fiscal Policy

The use of government revenue collection and expenditure to influence a country's economy.

Free Cash Flow (FCF)

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Rapid Exit Process

Specializing in quick and efficient business sales to meet the client's timing needs without compromising on the deal's value.

GAAP

Generally Accepted Accounting Principles - the standard framework of guidelines for financial accounting in a specific jurisdiction.

Going Private

A transaction or a series of transactions that convert a publicly traded company into a private entity.

Golden Handshake

A large financial compensation given to senior executives upon termination or retirement.

Golden Parachute

A substantial benefit promised to executives in the event that they lose their job due to a company being acquired or merged.

Goodwill

The intangible value of a business above its net assets, including brand reputation, customer relationships, and intellectual property.

Hedge Fund

A private investment fund that employs various strategies to generate high returns for its investors, often involving more risk.

Hostile Takeover

Indemnification

A legal agreement to compensate a party for losses incurred as a result of specific events or actions.

Index Fund

A type of mutual fund with a portfolio constructed to match or track the components of a market index.

Industry Analysis

Providing an in-depth analysis of the industry landscape to help clients understand potential opportunities and threats in their specific market.

Initial Public Offering (IPO)

The process of offering shares of a private corporation to the public in a new stock issuance.

Inorganic Growth

Growth achieved by mergers and acquisitions, and not by the company's internal business activities.

Insolvency

The state of being unable to pay debts as they fall due.

Intangible Assets

Assets that lack physical substance, such as patents, copyrights, goodwill.

Intellectual Property

Creations of the mind, such as patents, trademarks, copyrights, and trade secrets.

Internal Rate of Return (IRR)

A metric used in capital budgeting measuring the profitability of potential investments.

Investment Bank

A financial institution that assists companies in raising capital, mergers and acquisitions, and other corporate finance activities.

Joint Venture

An arrangement where two or more companies collaborate on a business project, sharing risks, rewards, and governance.

Key Performance Indicator

A measurable value that demonstrates how effectively a company is achieving key business objectives, often used to monitor performance and guide strategic decision-making.

Letter of Intent (LOI)

A non-binding document expressing the buyer's interest in purchasing a company and outlining the proposed deal terms.

Letter of Intent (LOI) Assistance

Drafting and reviewing LOIs, which outline the basic terms of a deal before the formal agreement is made.

Leverage Ratio

A financial ratio that indicates the level of debt incurred by a business entity against several other accounts in its balance sheet, income statement, or cash flow statement.

Leveraged Buyout (LBO)

A transaction in which a company is acquired using a significant amount of borrowed funds.

Liquidation

The process of converting a company's assets into cash to pay off its liabilities.

Liquidity

The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.

Liquidity Event

A period of time when private investors can cash out and sell their stakes in a company.

Lock-Up Period

A predetermined amount of time post-IPO where large shareholders, such as company executives and investors representing considerable ownership, are restricted from selling their shares.

Long-Term Incentive Plan

A compensation tool used by businesses to reward and retain key employees by providing them with financial incentives over an extended period, often linked to performance metrics or stock value.

Management Buyout (MBO)

A transaction in which a company's management team acquires the business from its current owners.

Management Buyouts

Guiding managers in buying the business they manage, ensuring a smooth transition and continuity in business operations.

Market Capitalization

The total dollar market value of a company's outstanding shares of stock.

Market Efficiency

The degree to which market prices reflect all available, relevant information.

Material Adverse Change (MAC)

A clause in mergers and acquisitions agreements allowing the acquirer to withdraw from the deal if the target company has experienced significant negative events.

Maximizing Sale Price

Using expertise and negotiation skills to get the best possible price when selling a business.

Merger

The combination of two or more companies into a single legal entity, typically by exchanging shares.

Merger and Acquisition Advisor

A professional who provides advice on transactions such as mergers, acquisitions, divestitures, and capital raisings. These advisors can represent the buyer or the seller in a transaction.

Mergers and Acquisitions (M&A) Advisory

Professional services offered by a group of experts in finance and business management who provide advice on mergers and acquisitions.

Mezzanine Financing

A hybrid of debt and equity financing often used in leveraged buyouts.

Minority Interest

An ownership stake in a company that is less than 50% and does not provide control over the company's operations.

Minority Shareholder

A shareholder who owns less than 50% of a company's shares and does not control the company.

Monetary Policy

The process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.

Multiple

A valuation metric used to compare the value of a company to a financial performance measure, such as EBITDA or revenue.

Mutual Fund

An investment program funded by shareholders that trades in diversified holdings and is professionally managed.

Net Present Value (NPV)

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Net Working Capital (NWC)

The difference between a company's current assets and current liabilities, representing its ability to meet short-term obligations.

Non-Compete Agreement

A contract in which a person or company agrees not to compete with the business of another company for a period of time.

Non-Disclosure Agreement (NDA)

A legal contract that establishes a confidential relationship between parties and prohibits the sharing of protected information.

Operating Income

Operating Margin

A profitability measure calculated as Operating Income divided by Revenue. It gives analysts an idea of how much a company makes (before interest and taxes) on each dollar of sales.

Operational Excellence

A philosophy of the workplace where problem-solving, teamwork, and leadership results in the ongoing improvement in an organization.

Option

A financial derivatives that represents a contract sold by one party (the option writer) to another party (the option holder).

Organic Growth

Growth achieved by a company's internal business activities.

Owner Retirement Planning

Providing guidance to business owners on how to plan for and successfully navigate retirement after selling their business.

Phantom equity

A compensation plan where employees receive benefits linked to the company's stock value, without owning actual shares. This often results in cash bonuses that mirror the gains of shareholders.

Portfolio Company

A company that a specific firm, venture capital firm, or buyout firm invests in is referred to as a portfolio company.

Post-Merger Integration (PMI)

The process of consolidating operations, systems, and culture after a merger or acquisition.

Post-Money Valuation

The value of a company immediately after the most recent capital round financing.

Pre-sale Preparation

Assisting business owners in preparing their company for sale, which may include improving financial statements, resolving any legal issues, and enhancing the business's value.

Preemptive Right

A contractual provision that allows existing shareholders to purchase new shares before they are offered to the public or other investors.

Private Equity (PE)

Capital that is not listed on a public exchange, composed of funds and investors that directly invest in private companies.

Pro Forma

A method by which financial results are calculated. This method of calculation places emphasis on present or projected figures.

Pro Forma Financial Statements

Financial statements prepared in advance, based on hypothetical scenarios to show the prospective financial impact of event such as a business combination or a change in capital structure.

Proxy Fight

A strategy used by shareholders to gain control of a corporation by persuading other shareholders to vote in a way that increases their control.

Public Company

A company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets.

Purchase Agreement

A legal document that outlines the terms and conditions of an M&A transaction, including the purchase price, representations and warranties, and indemnification provisions.

Purchase Agreement Assistance

Aiding in the negotiation, drafting, and review of the final purchase agreement to protect the client's interests and ensure a successful transaction.

Purchase Price Allocation (PPA)

The process of assigning a purchase price to the individual assets and liabilities of an acquired company.

Quantitative Easing (QE)

A monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject liquidity directly into the economy.

Quick Exit Strategy

Helping clients who need to sell their business quickly develop and execute a strategy that ensures a fast and successful exit.

Recapitalization

A type of corporate reorganization involving substantial change in a company's capital structure.

Reps and Warranties

Assisting in negotiating the representations and warranties in a purchase agreement, which are essentially the seller's assurances about the business's condition.

Restructuring

A significant modification made to the debt, operations, or structure of a company to avoid financial harm and improve the business.

Restructuring

Redesigning the financial, operational, or organizational setup of a company.

Retained Earnings

The portion of a company's net income that is not distributed as dividends but is reinvested in the business or used to pay off debt.

Return on Investment (ROI)

A performance measure that evaluates the efficiency of an investment, calculated as the net gain divided by the initial investment.

Revenue

The total amount of money a company receives from its sales of goods or services during a specific period.

Rights Issue

An invitation to existing shareholders to purchase additional new shares in the company.

Risk Management

The forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact.

Roll-up Strategy

A strategy used by companies in the same market looking to consolidate with other companies through acquisitions.

Secondaries

The sale of pre-existing investor commitments in private equity and other alternative investment funds by one investor to another.

Sell My Business Fast Service

Assisting business owners who need to sell their business quickly, providing fast, efficient, and high-quality advisory services.

Sell Your Business Service

A professional service that assists business owners in preparing for and executing the sale of their businesses.

Seller Financing

An arrangement where the seller provides a loan to the buyer for part of the purchase price, acting as the lender, with the buyer repaying over time.

Seller Note

A form of seller financing where the seller provides a loan to the buyer to cover a portion of the purchase price of a business.

Seller Representation

Providing advisory services to the seller in a business transaction, representing their interests and working towards achieving the best possible terms for them.

Selling a Business

The process of transferring ownership of a business to another entity. It involves determining the value of the business, preparing the business for sale, marketing the business to potential buyers, and negotiating the terms of the sale.

Selling a Business Service

A professional service provided by brokers, investment bankers, or other M&A professionals that helps business owners in selling their businesses.

Shareholder Activism

The efforts of shareholders to influence a corporation's behavior by exercising their rights as owners.

Shareholders' Equity

The residual interest in a company's assets after deducting its liabilities, representing the ownership interest of its shareholders.

Short Selling

An investment or trading strategy that speculates on the decline in a stock or other securities price.

Silent Partner

An individual whose involvement in a partnership is limited to providing capital to the business.

Sovereign Wealth Fund

A state-owned investment fund that invests in real and financial assets like stocks, bonds, real estate, and precious metals.

Special Purpose Acquisition Company (SPAC)

A company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company.

Spin-Off

A type of divestiture in which a parent company distributes shares of a subsidiary to the parent company's shareholders such that the subsidiary becomes an independent company.

Stakeholder

A party that has an interest in a company and can either affect or be affected by the business.

Standstill Agreement

A contract between a buyer and a target company that prevents the buyer from acquiring additional shares or making a hostile takeover bid for a specified period.

Strategic Buyer

A buyer who believes a target company can complement its existing business and help it to grow further.

Succession Planning

The process of identifying and developing new leaders who can replace the old leaders when they leave, retire or die.

Successor Identification

Assisting in identifying and evaluating potential successors, whether they are family members, employees, or external buyers.

Synergy

The benefits realized when two or more companies combine their resources, resulting in improved efficiency, cost savings, or increased revenue.

Tag-along Rights

A contractual obligation used to protect a minority shareholder (usually in a venture capital deal).

Takeover

The process of one company acquiring another company.

Tangible Assets

Assets that have a physical form, such as machinery, buildings, and land.

Technology Sector Specialization

The expertise and focus on mergers and acquisitions within the technology sector.

Tender Offer

A public offer made by a buyer to purchase a target company's shares at a specific price and within a specified time frame.

Trading Multiples

A valuation technique used to value a company by comparing company's financial measurement with similar companies in the industry.

Transaction Advisory Services

Professional services designed to help businesses make informed decisions during a merger, acquisition or other major corporate transaction.

Turnaround Management

The systematic and rapid implementation of change to reverse a company's fortunes.

Underwriting

The process through which an individual or institution takes on financial risk for a fee.

Valuation

The process of determining the financial worth of a company or asset, often using various methodologies such as discounted cash flow or comparable company analysis.

Valuation Assessment

Conducting a comprehensive analysis of a business's worth to guide decision-making in a merger, acquisition, or sale.

Value Creation

The performance of actions that increase the worth of goods, services, or businesses.

Value Maximization Service

A professional service that helps business owners improve their business operations and strategies to maximize their business value before selling.

Value Maximization Strategies

Implementing strategies to increase the company's value before the sale, such as improving operational efficiency or strengthening the customer base.

Venture Capital

Funding provided to startups and small businesses with perceived long-term growth potential, usually in exchange for equity or ownership stakes.

Volatility

A statistical measure of the dispersion of returns for a given security or market index.

Warrant

An agreement that gives the holder the right to purchase securities from the issuer at a specific price within a certain time frame.

Warranties

Legal assurances provided by a seller to a buyer in an M&A transaction, regarding the accuracy of information and the absence of undisclosed liabilities.

Weighted Average Cost of Capital (WACC)

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Working Capital

The cash and other short-term assets available to a company to finance its day-to-day operations.

Write-Down

Reducing the book value of an asset because it is overvalued compared to the market value.

Yield

The income return on an investment, such as the interest received from holding a security.

Zombie Company

A company that needs bailouts in order to operate, or an indebted company that is able to repay the interest on its debts but not repay the principal.

Glossary

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