Planned Liquidity Event A liquidity event is an event in which the shareholders of a company receive the opportunity to receive liquidity for their position in the company. Examples of liquidity events include: Companies can also build in synthetic liquidity events for investors. For example, redemptions, interest, balloon dividend payments or extension payments. A minority […]

Mergers and acquisitions (M&A) can be a powerful tool for companies looking to expand their operations, enter new markets, or acquire new technologies and capabilities. However, M&A also carries risks and requires careful planning and consideration. If you are considering acquiring a company, here are a few criteria to consider: Strategic Fit: One of the […]

Purchase order financing is a specialized form of commercial credit funding that offers a unique solution to cash flow challenges that may arise when fulfilling large customer orders. It provides companies with the necessary funds to pay their suppliers and complete orders without straining their working capital. Purchase order financing is a financial arrangement in […]

Usage: Mezzanine Finance is generally used in combination with an acquisition, restructuring, or other transactions, to bridge the gap between the total purchase price and the equity and senior debt that’s available. Costs: High interest rates, mid teens up to the low twenties, including an equity component. Term: 3-5 years, often with yield protection Overview Mezzanine […]

Definition: A derivative is a contract between two parties which derives its value/price from an underlying asset. The most common types of derivatives are futures, options, forwards and swaps. Description: It is a financial instrument which derives its value/price from the underlying assets. Originally, underlying corpus is first created which can consist of one security […]

Definition: Earnings per share or EPS is an important financial measure, which indicates the profitability of a company. It is calculated by dividing the company’s net income with its total number of outstanding shares. It is a tool that market participants use frequently to gauge the profitability of a company before buying its shares. Description: […]

Definition: Insider trading is defined as a malpractice wherein trade of a company's securities is undertaken by people who by virtue of their work have access to the otherwise non public information which can be crucial for making investment decisions. Description: When insiders, e.g. key employees or executives who have access to the strategic information […]

Definition: When a company declares a stock split, the number of shares of that company increases, but the market cap remains the same. Existing shares split, but the underlying value remains the same. As the number of shares increases, price per share goes down. Description: Stock split is done to infuse liquidity and to make […]

Definition: Preference shares allow an investor to own a stake at the issuing company with a condition that whenever the company decides to pay dividends, the holders of the preference shares will be the first to be paid. Description: Dividend payment of the preference shareholders is fixed and if somehow company liquefies, the owners of […]

Definition: Standard deviation is the measure of dispersion of a set of data from its mean. It measures the absolute variability of a distribution; the higher the dispersion or variability, the greater is the standard deviation and greater will be the magnitude of the deviation of the value from their mean. Description: The concept of […]