FINANCIAL GLOSSARY








Below is a glossary of financial terms written by us.
Simply click on a term to access its definition.
[For a correct use of this glossary, please consult these "notes"]

puce Later stage Investment

An investment in a company in order to finance its expansion and development with the purpose to increase its sales.

puce LBO

[Leveraged Buy-Out]
The acquisition of a company by members of management or outside investors with the assistance from investment bankers or other third parties.
The financing is secured by the target company's assets with repayment generated from the company's retained or future earnings or sales of certain of its assets.
See also Management Buyout (MBO).

puce LBO Fund

[Leveraged Buy-Out Fund]
An investment fund or company focusing on financing leveraged buy-outs (LBO).

puce Lead Investor

Within a syndicate the investor who is in charge of arranging the financing and possibly to follow the development of the company.

puce Lead Manager/Lead Underwriter

The underwriter that assumes leadership and responsibility for placing the securities offered to the public.
See also Global Coordinator.

puce Lease

A long-term rental agreement, and a form of secured long-term debt.

puce Leasing

Equipment leasing is basically a loan in which the lender buys and owns equipment and then rents it to a business at a flat monthly rate for a specified number of months.
At the end of the lease, the business may purchase the equipment for its fair market value (or a fixed or predetermined amount), continue leasing, lease new equipment or return it.

puce Lehman Formula

A compensation formula initiated by Lehman Brothers for investment banking activities (investment bank), originally structured as follows: 5% of the first million dollars involved in the transaction; 4% of the second million; 3% of the third million; 2% of the fourth million; and 1% of everything thereafter (ie above $4 million).

puce Letter of Intent

A legally non binding letter from one party to another indicating a general willingness or intention to engage in some type of transaction.
Usually subject to conditions.
Helps to clarify the intentions of the parties.

puce Leverage ratio (USA)

In a corporation the ratio between debt and preferred stock on the one part, and common stock on the other part ( liabilities / equity).

puce Leveraged Recapitalization

Transaction in which a company borrows a large sum of money and distributes it to its shareholders.

puce Liability

The state of being legally obliged and responsible to make a financial repayment.

puce LIBOR

[London Inter-Bank Offer Rate]
The interest rate that the largest international banks charge each other in the London inter-bank market .

puce License Agreement

A contract by which a domestic company (the licensor) allows a foreign company (the licensee) to market its products in a foreign country in return for royalties, fees, or other forms of compensation.

puce LIFO

[Last In First Out]
Inventory cost accounting method by which the first item to leave the inventory is assumed to be the last one to have entered the inventory.
Alternative treatment allowed for homogeneous or interchangeable inventory [IAS 2.22].

puce Limited Liability Company or LLC (USA)

A non-incorporated association that resembles a corporation in some ways and a partnership in others and whose liability is limited to the amount of its equity.
An LLC generally will be taxed as partnership.

puce Limited Partner

A person having an interest in a limited partnership whose liability is limited to the amount of his investment and who does not participate in the management of the partnership.

puce Limited Partnership

A partnership consisting of one or more general partners whose liability is unlimited and one or more special partners (the limited partners) who are not liable for the debts of the partnership beyond their capital contribution.
See also General Partnership.

puce Linear Regression

A technique in which a straight line is fitted to a set of data points to measure the effect of a single independent variable.
The slope of the line (often called beta in the context of the CAPM) is the measured impact of that variable (the market portfolio risk premium in the case of the CAPM).

puce Liquidation

Occurs when venture capital investors receive the proceeds of the sale of the assets of a portfolio company to one or more buyers.

puce Liquidation Preference

The contractual right of an investor to priority in receiving the proceeds from the liquidation of a company.
For example, a venture capital investor with a "2x liquidation preference" has the right to receive two times its original investment upon liquidation.

puce Liquidator

The person appointed by unsecured creditors to oversee the sale of an insolvent firm's assets and the repayment of its debts.

puce Liquidity

A market is liquid when it has a high level of trading activity, allowing buying and selling with minimum price disturbance.
Is also said of a market characterized by the ability to buy and sell with relative ease.

puce Listed company

A company whose shares are traded on a stock exchange.

puce Living Dead

Companies that have not achieved the milestones set by the investors.
They are likely to be abandoned even though they might survive.

puce LLC

[Limited Liability Company]
A non-incorporated association that resembles a corporation in some ways and a partnership in others and whose liability is limited to the amount of its equity.
An LLC generally will be taxed as partnership.

puce Loan

An arrangement in which a lender gives money or property to a borrower, and the borrower agrees to repay the money or return the property, usually along with interest.

puce Lock-up Agreement

Agreement between an underwriter and certain stockholders of a company requiring those stockholders not to sell their shares in the public market for a specified period after a public offering.
This period is customarily 180 days after an IPO and 90 days after subsequent offerings, but may range from 30 days to one year or more.

puce Lookback Option

Call orPut option whose strike price is only determined when the option is exercised.





 

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