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Glossary Acquisition Buy out of the majority shareholding of one company by another one. Acquisition Debt Debt subscribed to buy a company. Usually used by Private Equity. BIMBO Buy in management buy out. Combination of MBO and MBI, where the final Management team acquiring the company includes its own executives and new ones from other companies. Corporate Finance All issues related to the strategic financing of a corporation, such us buying other companies Development capital Type of Private Equity which invests in companies by a capital increase to finance new projects. Equity Ratchet Incentive scheme for the Management team of a MBO which increases its shareholding in the exit based on obtaining superior returns to the Private Equity. This means a share in the capital gain obtained proportionally higher to its shareholding in Newco. Goodwill Difference between the Net Book Value of a company and the price paid by a buyer. Stands for intangibles which are not valued in the books such as trade marks, position in the market,…. IRR Internal Rate of Return. It is the average percentage rate which obtains the Private Equity during its investment into a company. It is one of the main indicators to check the performance of a Private Equity fund. LBO Leverage buy out. Buy out of a company using debt with recourse only to the assets of such company. Usually used in MBO’s. Leverage Net financial debt of a corporation M&A. Mergers and Acquisitions Advisory activity to buy and sell companies. MBO Management buy out. Buy out of a company by its management team. Merger Combination of equity and operations of two corporations. Newco Vehicle corporation participated by the Private Equity and the Management Team which acquires the shares of the company. Private Equity Temporary investment in non quoted companies to forge its growth with the perspective of divesting in between 4 and 6 years with a capital gain. Sale & Purchase agreement Agreement to sell and buy the majority of the shares of a company. Secondary buy out Acquisition of a company which belongs to a Private Equity by another Private Equity. Target Company to be acquired Venture Capital Private equity which invests in small companies with high technological capabilities and expects a very steep growth in the near future |
