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Earnout
Earnout or earn-out refers to a pricing structure in mergers and acquisitions where the sellers must "earn" part of the purchase price based on the performance of the business following the acquisition. Earnouts are often employed when the buyer(s) and seller(s) disagree about the expected growth and future performance of the target company. A typical earnout takes place over a three to five-year period after closing of the acquisition and may involve anywhere from ten to fifty percent of the purchase price being deferred over that period. Buyers usually value companies based on historical performance while sellers may weight more heavily projections about higher growth prospects. With an earnout the seller's shareholders are paid an additional sum if some predefined performance targets are met. (See contingent value rights, having a similar function.) Earnouts are popular among private equity investors, who do not necessarily have the expertise to run a target business after clos ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mergers And Acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorption, a merger, a tender offer or a hostile takeover. As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position. Technically, a is the legal consolidation of two business entities into one, whereas an occurs when one entity takes ownership of another entity's share capital, equity interests or assets. From a legal and financial point of view, both mergers and acquisitions generally result in the consolidation of assets and liabilities under one entity, and the distinction between the two is not always clear. Most countries require mergers and acquisitions to comply with antitrust or competition law. In the United States, for example, the Cl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Contingent Value Rights
In corporate finance, Contingent Value Rights (CVR) are rights granted by an acquirer to a company’s shareholders, facilitating the transaction where some uncertainty is inherent. CVRs may be separately tradeable securities; they are occasionally acquired (or shorted) by specialized hedge funds. Forms These rights typically take either of two forms: (1) Event-driven CVRs compensate the owners for yet to eventuate positive developments in their business - hence protecting the acquirer against the valuation risk inherent in overpaying. (2) Price-protection CVRs are granted when payment is share based - protecting the acquired company, by providing a hedge against downside price risk in the acquirer's equity. In the first case, CVRs are granted Motley Fool (2018)''What Is a Contingent Value Right?''/ref> in scenarios in which the acquiring company does not wish to pay for a product that might not work, has a limited market, or might need significant investment; wherea ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Private Equity
Private equity (PE) is stock in a private company that does not offer stock to the general public; instead it is offered to specialized investment funds and limited partnerships that take an active role in the management and structuring of the companies. In casual usage "private equity" can refer to these investment firms rather than the companies in which they invest. Private-equity capital (economics), capital is invested into a target company either by an investment management company (private equity firm), a venture capital fund, or an angel investor; each category of investor has specific financial goals, management preferences, and investment strategies for profiting from their investments. Private equity can provide working capital to finance a target company's expansion, including the development of new products and services, operational restructuring, management changes, and shifts in ownership and control. As a financial product, a private-equity fund is private capital ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Revenue
In accounting, revenue is the total amount of income generated by the sale of product (business), goods and services related to the primary operations of a business. Commercial revenue may also be referred to as sales or as turnover. Some company, companies receive revenue from interest, royalties, or other fees. This definition is based on International Accounting Standard, IAS 18. "Revenue" may refer to income in general, or it may refer to the amount, in a monetary unit, earned during a period of time, as in "Last year, company X had revenue of $42 million". Profit (accounting), Profits or net income generally imply total revenue minus total expenses in a given period. In accountancy, accounting, revenue is a subsection of the equity section of the balance statement, since it increases equity. It is often referred to as the "top line" due to its position at the very top of the income statement. This is to be contrasted with the "bottom line" which denotes net income (gross reve ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Net Income
In business and Accountancy, accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and Amortization (accounting), amortization, interest, and taxes, and other expenses for an accounting period. It is computed as the residual of all revenues and gains less all expenses and losses for the period,Weil, Schipper, Francis. (2009) Financial Accounting: An Introduction to Concepts, Methods, and Uses. Cengage Learning and has also been defined as the net increase in Equity (finance), shareholders' equity that results from a company's operations.Weil, Schipper, Francis. (2010) Financial Accounting. Cengage Learning. It is different from gross income, which only deducts the cost of goods sold from revenue. For Household, households and individuals, net income refers to the (gross) income minus taxes and other deductions (e.g. mandatory pension cont ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
EBITDA
A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, pronounced ) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandated payments, and costs required to maintain its asset base. It is derived by subtracting from revenues all costs of the operating business (e.g. wages, costs of raw materials, services ...) but not decline in asset value, cost of borrowing and obligations to governments. Although lease have been capitalised in the balance sheet (and depreciated in the profit and loss statement) since IFRS 16, its expenses are often still adjusted back into EBITDA given they are deemed operational in nature. Though often shown on an income statement, it is not considered part of the Generally Accepted Accounting Principles (GAAP) by the SEC, hence the SEC requires that companies registering securities with it (and when filing its periodic reports) reco ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Earnings Before Interest And Taxes
In accounting and finance, earnings before interest and taxes (EBIT) is a measure of a firm's profit that includes all incomes and expenses (operating and non-operating) except interest expenses and income tax expenses. Operating income and operating profit are sometimes used as a synonym for EBIT when a firm does not have non-operating income and non-operating expenses. Formula *EBIT = (net income) + interest + taxes = EBITDA – (depreciation and amortization expenses) *operating income = (gross income) – OPEX = EBIT – (non-operating profit) + (non-operating expenses) where *EBITDA = earnings before interest, taxes, depreciation, and amortization *OPEX = operating expense Overview A professional investor contemplating a change to the capital structure of a firm (e.g., through a leveraged buyout) first evaluates a firm's fundamental earnings potential (reflected by earnings before interest, taxes, depreciation and amortization (EBITDA) and EBIT), and then determines the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bottom Line
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes, and other expenses for an accounting period. It is computed as the residual of all revenues and gains less all expenses and losses for the period,Weil, Schipper, Francis. (2009) Financial Accounting: An Introduction to Concepts, Methods, and Uses. Cengage Learning and has also been defined as the net increase in shareholders' equity that results from a company's operations.Weil, Schipper, Francis. (2010) Financial Accounting. Cengage Learning. It is different from gross income, which only deducts the cost of goods sold from revenue. For households and individuals, net income refers to the (gross) income minus taxes and other deductions (e.g. mandatory pension contributions). Definition Net income can be distributed among holders ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Capital Expenditures
Capital expenditure or capital expense (abbreviated capex, CAPEX, or CapEx) is the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. It is considered a capital expenditure when the asset is newly purchased or when money is used towards extending the useful life of an existing asset, such as repairing the roof. Capital expenditures contrast with operating expenses (opex), which are ongoing expenses that are inherent to the operation of the asset. Opex includes items like electricity or cleaning. The difference between opex and capex may not be immediately obvious for some expenses; for instance, repaving the parking lot may be thought of inherent to the operation of a shopping mall. Similarly, the costs of software for a business (either software development or software as a service licensing) might fall into either opex or capex (that is, is it merely business as usual, or is it somet ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Business Plan
A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals. It also describes the nature of the business, background information on the organization, the organization's financial projections, and the strategies it intends to implement to achieve the stated targets. In its entirety, this document serves as a road-map (a plan) that provides direction to the business. Written business plans are often required to obtain a bank loan or other kind of financing. Templates and guides, such as the ones offered in the United States by the Small Business Administration can be used to facilitate producing a business plan. Audience Business plans may be internally or externally focused. Externally-focused plans draft goals that are important to outside stakeholders, particularly financial stakeholders. These plans typically have detailed information about the organization or ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Venture Capital
Venture capital (VC) is a form of private equity financing provided by firms or funds to start-up company, startup, early-stage, and emerging companies, that have been deemed to have high growth potential or that have demonstrated high growth in terms of number of employees, annual revenue, scale of operations, etc. Venture capital firms or funds invest in these early-stage companies in exchange for Equity (finance), equity, or an ownership stake. Venture capitalists take on the risk of financing start-ups in the hopes that some of the companies they support will become successful. Because Startup company, startups face high uncertainty, VC investments have high rates of failure. Start-ups are usually based on an innovation, innovative technology or business model and often come from high technology industries such as information technology (IT) or biotechnology. Pre-seed and seed money, seed rounds are the initial stages of funding for a startup company, typically occurring earl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
