Depreciation
Depreciation records the loss in value of assets such as machines or vehicles over their useful life. They reflect the wear and tear of these goods in accounting and reduce profit

Adjustments
Adjustments, e.g. to exclude one-time effects from EBITDA. Often a matter of negotiation between buyer and seller

Add-on acquisition
Acquisition of a company as an addition to an existing portfolio company. Typical part of a buy-and-build strategy

Asset-light
Business model with low balance sheet assets. Assets are often rented instead of held

Binding Offer

Binding purchase offer from an interested party. Basis for subsequent conclusion of the purchase contract

Business Plan

Central planning and communication basis. Combines financial figures (turnover, costs, cash flows) with strategic goals and serves as a convincing presentation to investors, banks and partners.

Buy-and-build
M&A strategy for inorganic growth through acquisitions around an existing company. The aim is to increase value through economies of scale and synergies

BWA (Business Evaluation)
The BWA is a tool for short-term performance analysis that is created on the basis of accounting data. It enables entrepreneurs

Cap Table (Capitalization Table)

Overview of shareholder structure and shareholding relationships. Clarifies ownership shares, dilution potential and exit scenarios — essential for transparency in investor processes.

cash flow
Cash flow shows the net inflow of liquid assets within a specific period of time and provides information about the financial position of a company. It takes into account all deposits and withdrawals and is an indicator of liquidity.

Cash Conversion Cycle (CCC)
The cash conversion cycle measures the period of time between the purchase of goods and receipt of payment from their sale. A shorter cycle indicates a more efficient use of capital.

CIM (Confidential Information Memorandum)
Detailed, confidential company presentation for potential buyers. Delivered after signing an NDA

Due diligence
Digital or physical collection of all transaction-related documents. Used to provide information as part of due diligence

data room
The data room comprises all information and data relevant to the buyer about a purchased object, which is provided to the buyer as part of a Due diligence be made accessible

DCF (discounted cash flow)

Valuation method based on discounted future cash flows. Conveys a theoretically sound company value, sensitive to assumptions — often requires explanation in the investor pitch.

Debtors (receivables)
Debtors are customers who have received goods or services on account and whose payments are still pending. In accounting, these outstanding receivables are recorded as assets.

Debt/equity ratio

Key figure for the debt ratio. Provides information about creditworthiness and risk profile — important for banks and potential financiers.

Earn-Out
Part of the purchase price whose payment is linked to future target achievement. Is contractually regulated in the SPA

Multiple EBITDA

Common multiplier for indicative company valuation. Enables quick comparability — often the starting point in discussions with investors and buyers.

equity
Equity is the portion of capital contributed by the owners of a company or derived from retained earnings. It represents liable capital and forms the basis for financial stability.

Enterprise Value
The total value of a company, regardless of its capital structure. Basis for many evaluation procedures

Equity Story

Central argument for the attractiveness of the business model. Does that answer “Why invest? “— The basis of every successful investor conversation.

Exit

Sale of company shares, e.g. through trade sale, buyout or IPO. Target perspective for investors — one of the decisive factors for their willingness to get involved.

factoring
Factoring is the sale of receivables from a company to a third party (factor) in order to obtain immediate liquidity. The factor assumes the risk of default and often also claims management.

Debt financing

Raising capital through loans or bonds. Leverages growth, but also increases risk — often an issue in the financing pitch.

HGB/IFRS
The HGB (Handelsgesetzbuch) is the basis for accounting in Germany, while the IFRS (International Financial Reporting Standards) represent international accounting standards

IPO (Initial Public Offering)

First listing of a company on the stock exchange. Serves capital raising, visibility and liquidity — a milestone with a high level of visibility.

IRR (Internal Rate of Return)

Internal rate of return as a measure of the expected return on an investment. Decision-making basis for institutional investors and fund managers.

Capital increase

Issuance of new shares to strengthen equity. Leads to dilution, but signals growth ambitions — an important signal to capital markets and investors.

consolidation
Consolidation is the process of combining the financial data of parent and subsidiary companies into a uniform consolidated financial statement. This eliminates intra-group transactions in order to represent the economic situation of the Group as a whole.

Deferred taxes
Deferred taxes arise as a result of temporary differences between commercial and tax profit calculation.

Liquidation Preference

Preferential regime for returns in the event of an exit. Create clarity about distribution — essential in VC term sheets and participation agreements.

LBO (Leveraged Buyout)
Acquisition of companies primarily with external capital. The aim is a high return on equity — with the corresponding risk

Letter of Intent
Letter of intent setting out the outline of a potential transaction. Usually non-binding, but trend-setting

Leverage

Leverage through borrowed capital. Can increase returns on equity, but increases risk — particularly relevant in the case of leveraged buyouts.

Locked Box
Purchase price regulation with a fixed cut-off date for balance sheet data. Economic risks and returns from this date are transferred to the buyer

LongList
First selection of potential buyers or sellers in the M&A process. Basis for further narrowing down to the shortlist

Multiples
Key figures for company valuation based on comparative figures. For example, EV/EBITDA or EV/revenue are common

Mezzanine capital

Hybrid form of financing between equity and debt capital. Can be used flexibly, often with a subordination or conversion option — communicates financial strength without a control charge.

Net financial liability
Net debt = interest-bearing liabilities minus liquid assets. Important factor in company valuation

Net Working Capital (NWC)
Net working capital (net working capital) is the difference between current assets and current liabilities.

NDA (Non-Disclosure Agreement)
Confidentiality agreement between buyer and seller. Prerequisite for access to sensitive information

private equity
Financial investors who invest capital in companies to increase their value. The goal is a profitable exit

Runway

Period until liquid assets run out at the current burn rate. Critical factor in communication with VCs and business angels.

provisions
Provisions are liabilities on the balance sheet that are created for uncertain liabilities or impending losses from pending transactions.

Terminal Value

Value after the explicit planning period — often the largest share in DCF. Requires careful derivation and communication in the evaluation dialogue.

term sheet

Preliminary contract with the key points of an investment or sale. Provides clarity about economic conditions — the basis for subsequent contracts.

teaser
Brief description of a company's initial market approach. Mostly anonymized and before NDA dispatch

SPA (Share Purchase Agreement)
Legally binding purchase agreement for company shares. Regulates all terms of the transaction

WACC (Weighted Average Cost of Capital)

Total cost of capital as a benchmark for investment decisions and DCF valuations. Shows the minimum interest rate that investors expect.

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