Definition of Terms

  • Asset: A resource owned and, or controlled by a business, be it tangible or intangible, that participates directly or indirectly in creating economic value for its shareholders and stakeholders.
  • Business Model: A company's model for how it will create value, by generating revenues while making profits.
  • Cash balance: The on-hand amount of money available in an (bank) account.
  • Debt: Interest-bearing securities that include senior debt, mezzanine loans, shareholder loans, etc.
  • EBIT: Earnings before Interest and Taxes, calculated as revenue minus expenses, excluding tax and interest.
  • Enterprise Value: Enterprise Value: The total value of the financial instruments representing ownership interest (equity) in a business entity plus the value of its debt or debt-related liabilities, minus any cash or cash equivalents available to meet those liabilities.
  • Equity Value: The value of a company available to owners or shareholders.
  • Fair Value: The price that would be received to sell an asset in an orderly transaction between market participants given current market conditions at the measurement date.
  • Financial Forecast: A commitment from company management to deliver X% market share using Y$ resources whilst executing the strategic sequence Z, constrained with market conditions prevailing at all times T of the business plan.
  • Investment: refers to the individual financial instruments held by an investor in an investee company.
  • Invested capital: Is the sum of Shareholders' equity and Net financial debt.
  • Lifecycle: Is the stage evolution of a business over time.
  • Majority shareholders: A particular shareholder or block of shareholders holding a percentage of shares that gives them significant voting power.
  • Minority shareholders: A particular shareholder or block of shareholders holding a small proportion of a company’s outstanding shares, resulting in a limited ability to exercise control in voting activities.
  • Post Revenue: Phase when company starting generating revenues.
  • Pre Revenue: Phase in which the company does not generate revenues yet. This is the period when the company sets up the development of the product.
  • PreMoney valuation: PreMoney valuation: Valuation of a company or asset prior to an investment or financing.
  • Profitability: Is a company’s capability of generating profits from its operations.
  • Return: The cash flows generated by the operating cycle of a business following upon an investment event. Be it an organic business decision or an external pure financial investment.
  • Revenue: The value amount charged for the delivery of goods or services in the ordinary activities of a business over a stated period.
  • Share: Is a fractional unit of Equity ownership in a company.
  • Shareholders: Individuals or entities that claim share or equity ownership in the company.
  • Valuation: The process of measuring the fair value of an asset assuming the Investment is realized or sold at the measurement date whether or not the asset is prepared for sale or whether its shareholders intend to sell in the near future.
  • Venture Capital Fund: A private capital fund that invests in early stage enterprises with strong growth potential. These Investments are generally characterized as high-risk/high-return opportunities.

Last updated: January 2020