PE Jargon Flashcards
Book, CIM, CIP
Confidential Information Memorandum (CIM), Confidential Information Presentation (CIP). Market the company during the deal process
EBITDA
Earnings before interest, tax, depreciation, and amortization. An attempt to get net income closer to cash flow. Valuation number (matters more than net income). Deals are done cash free and debt free EBITDA is used
Adjusted earnings
One-time items added to the earnings number. Define that item tho
Add backs
The ‘one-time item’ used to get to adjusted earnings
Accretive
Incremental growth of earnings. ADD to the earnings of the acquirer. What you want
Platform
Underlying operations of a business. Company that can scale with minimal capital investment
TTM, LTM
Trailing twelve months, last twelve months
Exit multiple
Multiple the adjusted EBITDA the company is valued at
Enterprise value, EV
Total value including cash reduced by existing debt
MP
Management Presentation. Books > IOI > buyers list reduced to 15 to 3 > management presentation begin. Direct access to the management team
ReCap
Recapitalization. Restructure equity and/or debt
Retrade
Deal repriced with exclusivity. Happens during QofE
Proforma
Forward looking financial models
Quality of Earnings, QofE
Audit of financial statements going back e-5 years. To confirm EBITDA number is correct. Done by buyer. Seller might perform to increase value during marketing stage - more confidence in numbers
De Novo
From the new. New location started, not acquired
Tuckin
Small deal, absorbing a small company. In PE, you are either a platform and you acquire OR you are acquired by the platform and ‘tuckedin’
Strategic buyer
Competitor buyer. Direct competitor or someone new to the space
Center-level EBITDA
EBITDA generated under roof of location/division without corporate allocations
Deal flow
Condition of current PE environment. High/low deal glow
Regional Density
Region the company covers. If company provides service- want to see multi state operation. If have a couple companies spread through the states, the Reginal Density is not achieved
CAGR
Compound annual growth rate. Rate of return needed to get brome beginning to end balance. Profits reinvested at the end of year
Run rate
Revenue growth rate over a period of years/quarters. Used with expenses and earnings
Scalable
Grow without disruption or great capital demands. Platform companies should should scale easily while increasing earnings
ROI
Return on interest
ROR
Rate of return, over time.net gain or net loss
YOY
Year over year, percent change
Cap Table
Shows Ownership of business and how much they own. Generally fully diluted
Fully diluted
Shares after all possible shares are converted (bonds, options, eployyee stock)
Contribution margin
Margin a product or location contributes to business
Roll-over
Amount of equity existing for management team to roll into new deal
GAAP
Generally accepted accounting principle
Internal rate of return, IRR
Net return earned over years. Not a return of cash, just a calc value of how well the cash is being used to generate value
Beauty pageant
IB compete to represent the business
MOIC
Multiple of invested capital. Return multiple. If invest 5 and get 15 then MOIC is 3x
