17/06/2011

By Michelle Williams, Marketing Manager at AngelNews

More key investment terms and phrases for you to get your head around. Have you ever been involved in a conversation about investing and got lost in all the jargon? Continue to read our glossary and stay in the know!

Share Option/Stock Options

The right to purchase or sell a share at a specified price within a stated period. The transaction takes place between the existing shareholder and another party. Note: Frequently the term warrant is used interchangeably with option. Options are often used for employee incentivisation and compensation.

Silent Partner

An investor who is not involved in the running or strategic direction of a company of which he is a shareholder.

Slippage

Delay experienced by a company in achieving financial projections as forecast by the company's plan.

Sophisticated investor

An investor in high risk assets (eg private equity) who has been approved by a specialist in the relevant field as being an expert in investing in that asset class - defined in the Financial Services and Markets Act 2000 (qv). A sophisticated investor has less protection under the law than an Accredited Investor (qv) in the UK.

Spin-out

Emergence of a company in its own right from a larger entity eg a business or, more commonly in the UK, from a University research department.

Star

High-growth company performing well.

Start-up capital

Capital that is raised post the seed capital stage to enable the company to commence trading.

Strategic Investors

These are investors that add value to a company by using their industry and personal ties.

Subscription Agreement/Shareholder Agreement

The agreement signed by investors and the company and its directors in a financing round, setting out the terms and conditions of the investment and obligations of the signatories thereto.

Sweat Equity

Equity which is given to the founder of the company in recognition of the effort (sweat) which he has expended in getting the company started up.

Syndicate

Underwriters or broker/dealers who sell a security as a group.

Tag-along Rights/Rights of Co-sale

This is when a minority shareholder is given the right to include their shares in any sale of control and at the same price offered to the majority shareholders.

Take-over Code

The Code of Practice operated in the context of taking over companies, overseen by the Panel on Takeovers and Mergers.

Takedown Schedule

This is a document detailing the timing and size of the capital contributions from the limited partners of a venture fund.

Target Company

A company which has been identified as a suitable acquisition

techMARK

The London Stock Exchange market within a market, grouping together the innovative technology companies. Since its launch in 1999, techMARK has established itself as a leading global market for shares in businesses at the cutting edge of technological innovation. Associated with techMARK is techMARK mediscience, the world's first international market for healthcare companies. These companies are world leaders in the fields of science and technology and techMARK mediscience recognises the dynamism and huge potential within the healthcare industry. techMARK mediscience is designed to maximise these advantages by catering for the unique requirements of these businesses. The FTSE techMARK All-Share Index includes all techMARK companies; theFTSE techMARK 100 Index excludes the largest companies and focuses on medium and small techMARK companies at the generally faster-growing end of the market; and the FTSE techMARK mediscience Index is specifically for emerging healthcare companies in the early stages of growth. The market went live on the 4th November 1999 with over 190 companies from across the main market.

Tender Offer

An offer to purchase stock made directly to the shareholders.

Term Sheet

A summary of the terms the investor is prepared to accept.A non-binding outline of the principal points which the Subscription Agreement (qv) and related agreements will cover in detail.

Time Value of Money

The concept that all money can earn a cash return, therefore £1 today will be worth more in the future if invested, after adjusting for inflation.

Trade Sale

Sale of a company to another company. As a form of exit, it is an alternative to flotation and more common.

Treasury Stock

Redeemable Stock issued by a company, but later reacquired. It may be held in the company's treasury indefinitely, reissued to the public, or retired. Treasury stock receives no dividends and does not carry voting power while held by the company.

Turnaround

An investment in a company in trouble, which seeks to revive the company's fortunes and set it on a profitable course.

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