Glossary
- AUM – Assets Under Management: The total value of assets managed by a firm.
- AML – Anti-Money Laundering: Regulations preventing financial crimes.
- CAGR – Compound Annual Growth Rate: Annual growth rate over time.
- CAPEX – Capital Expenditures: Funds used for acquiring/upgrading assets.
- CDS – Credit Default Swap: A financial derivative for default protection.
- CIF – Cost, Insurance, and Freight: A trade term covering expenses.
- COGS – Cost of Goods Sold: Direct costs of production.
- D&A – Depreciation and Amortisation: Non-cash expenses reducing asset value.
- DCF – Discounted Cash Flow: A valuation method using projected cash flows.
- DPI – Distributions to Paid-in Capital: Measures cash returns to investors in PE funds.
- EBIT – Earnings Before Interest and Taxes: Operating profit before financing costs.
- EBITDA – Earnings Before Interest, Taxes, Depreciation, & Amortisation.
- EBITDAR – EBITDA plus rent costs, often used for asset-heavy businesses.
- EPS – Earnings Per Share: Measures profit allocated per share.
- EV – Enterprise Value: A company’s total valuation including debt and equity.
- FDD – Financial Due Diligence: Assessing financials before an acquisition.
- FAIR – Fairness Opinion: An independent assessment of an M&A deal’s fairness.
- FCF – Free Cash Flow: Cash generated after capital expenditures.
- GAAP – Generally Accepted Accounting Principles: Standard accounting rules.
- GPM – Gross Profit Margin: Revenue minus COGS, divided by revenue.
- IFRS – International Financial Reporting Standards: Global accounting standards.
- IPO – Initial Public Offering: The first sale of stock to the public.
- IRR – Internal Rate of Return: The discount rate that makes NPV zero.
- KPI – Key Performance Indicator: A metric for measuring success.
- KYC – Know Your Customer: Compliance procedures for verifying clients.
- LBO – Leveraged Buyout: Acquisition using borrowed funds.
- LOI – Letter of Intent: A preliminary agreement in M&A transactions.
- LTIP – Long-Term Incentive Plan: A compensation scheme for executives.
- M&A – Mergers and Acquisitions: The consolidation of companies or assets.
- MBO – Management Buyout: A company’s management team buys the business.
- MOIC – Multiple on Invested Capital: Ratio of value to invested capital.
- NAV – Net Asset Value: The total value of a company’s assets minus liabilities.
- NIM – Net Interest Margin: A measure of banking profitability.
- NPV – Net Present Value: The value of future cash flows discounted to today.
- NWC – Net Working Capital: Current assets minus current liabilities.
- OPEX – Operating Expenses: Costs associated with running a business.
- OPM – Operating Profit Margin: Operating profit as a percentage of revenue.
- P/E – Price-to-Earnings Ratio: Measures a company's valuation relative to earnings.
- PPA – Purchase Price Allocation: The allocation of the purchase price in an M&A deal.
- ROA – Return on Assets: Measures profitability relative to total assets.
- ROE – Return on Equity: Measures profitability relative to shareholders’ equity.
- ROIC – Return on Invested Capital: Profitability relative to total capital invested.
- SBA – Small Business Administration: A US agency supporting small businesses.
- SPAC – Special Purpose Acquisition Company: A Company created for acquisitions.
- SPA – Sale and Purchase Agreement: The legal contract for an M&A deal.
- TSA – Transition Services Agreement: Temporary support from the seller.
- TSR – Total Shareholder Return: The total return from an investment.
- TVPI – Total Value to Paid-in Capital: Measures total fund performance in PE.
- VDR – Virtual Data Room: A secure online space for due diligence.
- WACC – Weighted Average Cost of Capital: Average return required by investors.