Call or call option
A call or call option is the right (but not the obligation) to acquire shares in a company within a period of time or at a time at an agreed exercise price. The counterpart of a call option is the put option (see therefore also Put Option).
A cap is the maximum amount for which the seller is liable to the buyer for warranty claims. In practice, it is often between 25 and 50% of the purchase price. Furthermore, the cap also refers to interest limitation clauses for loans with variable interest rates. The interest rate can be limited upwards (cap) or downwards (floor).
CAPEX is the abbreviation for Capital Expenditure. This is capital expenditure by an enterprise for longer-term fixed assets (for example, new machines, new factory buildings).
Capital distribution refers to the corporate assets which are paid out to the shareholders without being the distribution of the net income for the year or retained earnings. The payment is therefore made from the substance of the company. In practice, it is common practice that the seller undertakes in company purchase agreements not to make such distributions in the period between signing and closing.
Capital employed is the investment capital used by the company. It is calculated as the sum of fixed assets and current assets less current liabilities.
Captial Expenditures (CAPEX) are expenditures for investments in fixed assets. In the context of company valuation, free cash flow is determined by deducting capital expenditures from cash flow.
The capital gain arises from the sale of company investments or other assets. It refers to the capital gain less acquisition costs or book value and disposal costs.
Capital Lease is the English term for finance lease. The lessor leases the leased asset to the lessee for its entire life.
The term capital stock refers to the nominal capital or the share capital of a company. The capital stock is shown on the liabilities side of the balance sheet. Here it is important to differentiate between equity and capital stock. In addition to the nominal capital, the equity capital also includes revenue reserves and premiums.
Capital under Management
Capital under management is the amount of capital available to a private equity fund for investment purposes.
Captive is the short form of captive company and describes a company that belongs to a group of companies but actually performs tasks outside the group. An insurance company belonging to a group would thus be an example of a captive.
A captive company (also known as a captive in the short form) is a company that belongs to a group of companies but actually performs tasks outside the group. A captive insurance company would therefore be an example of a captive.
A captive fund is a venture capital or private equity fund that belongs to a group of companies and predominantly invests money from that group.
Captive insurance company
A captive insurance company is an insurance company that does not belong to an insurance group and has the task of insuring risks of the group.
Carried interest is the remuneration that managers of a venture capital or private equity fund receive in return for making a profit on the assets managed by the fund. The carried interest is their share of this profit.
Carve-out means "to carve out" and refers to the spin-off of a company share to form a legally independent unit. The parent company usually remains the sole shareholder of the carved-out business unit for the time being. There are similarities to a spin-off, whereby the spun-off part of the company is not made into an independent company, but is sold. Furthermore, a carve-out is often also seen as preparation for a sale or an IPO.
Case scenarios is the English term for case studies that are carried out, for example, to examine potential involvement. Three types of cases are often considered: A pessimistic case scenario for a negative development, an optimistic case scenario for a positive development and a most-likely scenario for the most probable development.
The liquid assets of a company are called cash.
Cash flow is a key indicator for the valuation of companies. It is calculated from the net income for the year or retained earnings and enables statements to be made about the liquidity and earning power of a company.
Cash flow deals
In cash flow deals, the acquirer finances the purchase price through future cash flows.
Cash Free - Debt Free
Cash Free/Debt Free is an indication of the purchase price that would be paid if the company had neither cash nor financial debt (Enterprise Value).
The distribution of profits in a private equity fund is regulated by a catch-up provision.
CDO is an abbreviation for Collateralized Debt Obligation (see therefore also Collateralized Debt Obligation).
Central Settlement Agent
Central settlement means that the invoices of many suppliers, for example to the members of a purchasing cooperation, are recorded, processed and settled by a central office. Since the members also assign their corresponding receivables to the central payer, one of the things to ensure in factoring is that the priority principle is observed.
The CEO is an abbreviation for Chief Executive Officer.
Certain funds represent a bank's commitment to provide the funds specified in the loan agreement for a certain period of time. The Certain Funds commitment gives the seller of the company the certainty that payment of the purchase price is secured.
Certificate of Good Standing
The Certificate of Good Standing confirms that a company has been effectively established and is currently in existence without insolvency or liquidation proceedings being pending.
The CFO is an abbreviation for Chief Financial Officer. This job title describes a person who holds a management position in finance.
The behaviour of the employees of merging companies is brought together in the context of change management.
Change of control
The change in control of a company is called a change of control.
Change of Control Clause
The Change of Control Clause is a contractual clause that regulates the rights of the parties in the event of a change of control of one party. The party is often granted a right of termination in this case.
Chief Executive Officer
The Chief Executive Officer (CEO for short) is the highest-ranking manager in Anglo-Saxon companies. The position of a Chief Executive Officer is comparable to the managing director of a GmbH or the chairman of the board of an AG.
Chief Financial Officer
The Chief Financial Officer (CFO) is the highest-ranking manager responsible for finance in the Anglo-Saxon world.
Chief operating officer
The Chief Operating Officer (COO for short) is the manager who runs the operational business in Anglo-Saxon companies. In practice, in many companies the Chief Financial Officer assumes the function of Chief Operating Officer.
Strict information barriers must be put in place to avoid conflicts of interest within a financial institution. These information barriers can also be called Chinese Wall. Employees in the respective departments, which are separated by a Chinese Wall, are not allowed to exchange any information.
Choice of Forum Clause
The Choice of Forum Clause is the agreement of the contracting parties as to the court before which any disputes are to be settled.
Choice of Law Clause
The Choice of Law Clause is the agreement that governs which law is to be applied to international contracts.
Classes are the various classes into which shares can be divided. Examples of such classes are ordinary or preference shares.
A clawback clause regulates the distribution of profits in a private equity fund or investment fund. This clause stipulates that the profit achieved is fully attributable to the investors (limited partners) as soon as a contractually agreed maximum profit has been distributed to the fund initiators. The investors' financial risk can thus be reduced.
Clearing refers to the offsetting of receivables and payables with the aim that only the net balances calculated in this way are cleared.
In the M&A practice, closing is the execution of a company purchase agreement. The closing usually takes place in the form of a physical or telephone meeting of the contracting parties, during which the closing actions are carried out.
Closing actions relate to measures and actions taken in the course of the execution of a company purchase agreement. The payment of the purchase price or the resignation of the managing director are examples of closing actions.
Closing conditions are the agreed conditions that must be present for the execution of the contract (closing). The most important Closing Condition is the existence of the anti-trust clearance (Merger Clearance).
The closing date is the day on which the closing takes place (see also Closing).
Closing Deliveries are documents that were exchanged between the contracting parties during the closing.
A club deal is a term used to describe all those investments that are planned and made jointly by several financial investors.
The bank that structures a credit exposure together with other banks is called a co-arranger.
A subsequent investment in a company by additional investors is called co-investment.
A co-lead manager is a lending bank that is at the head of a loan syndicate alongside the lead bank.
A co-sale right is another term for a tag-along right and refers to the right of co-sale (for example, by a minority owner) on the same terms as a majority owner sells his shares.
COB Rules is an abbreviation for Conduct of Business Rules. These are my obligations of good conduct that financial service providers and credit institutions must fulfil towards their customers.
Collateral is a collective term for loan collateral.
Collateralized debt obligation
When we speak of collateralized debt obligations, we are referring to securities that are secured by a pool of different types of receivables.
Collateralized loan obligation
A collateralized loan obligation is a security secured by a pool of corporate loans.
A comfort letter is a declaration by a parent company in which it promises to help its subsidiary in case of financial difficulties.
A commitment facility is the obligation of a bank to make the credit (facility) available in the agreed amount.
A commitment fee is a commitment fee for loans that have been made available but not yet drawn down.
A Commitment Letter is a formal offer by a bank to provide a loan on the terms and conditions specified in the Commitment Letter.
Common Stock is an English term for ordinary shares.
In M&A practice, a company buy-back is the repurchase of own shares by a company from a financial investor.
Completion is a British synonym for closing in company acquisitions.
Compliance is a collective term for the observance of rules of conduct, guidelines and laws in a company.
The Compliance Certificate is a confirmation by the borrower to the bank that he/she has complied with the obligations (covenant) agreed in the loan agreement.
The condition precedent in a contract is referred to as the condition precedent. For example, the closing is the condition precedent for the transfer of company shares in a company purchase agreement.
Conduct of Business Rules
The Conduct of Business Rules (COB Rules for short) are the duties of good conduct that credit institutions and financial service providers must fulfil vis-à-vis their customers.
The Confidential Undertaking constitutes the unilateral obligation of a party to keep confidential any information received from the other party.
A Confidentiality Agreement is the obligation of the parties to keep confidential information received from the other party.
Confirmatory Due Diligence
A Confirmatory Due Diligence is the downstream due diligence of a company buyer. This is the last phase of the due diligence process and takes place, for example, after the closing.
The version of a document confirmed as binding is called Conformed Copy.
Consolidated Financial Statements
The financial statements of a company that consolidates all the financial statements of all its subsidiaries and sub-subsidiaries are called consolidated financial statements.
A Consortium is an association of several companies to carry out a task (for example, an investment project) jointly. The cooperation ends after the project has been realized.
If several lenders grant a loan, they must agree on the ranking of their claims. Contractual subordination is the agreement that regulates this matter.
Contractual Trust Agreement
A contractual trust agreement is the legal structure for outsourcing pension obligations from a company for accounting purposes, while at the same time improving the insolvency resistance of pension claims.
COO is the abbreviation for Chief Operating Officer. A COO manages the operational business.
Corporate finance is a special field of finance and is offered in particular by banks and financial institutions as a service for companies. This includes in particular advice on project financing, the evaluation of investment decisions and the value of the company as well as the financing of mergers and acquisitions. Other topics include, for example, advice on the optimal capital structure and dividend policy.
Corporate governance refers to the legal and institutional framework that influences the management decisions of a company and thus its success.
A corporate raider (or corporate looter) is an investor who wants to take over the target company against the will of its management or wants to impose its business strategy on the management. The goal of a corporate raider is often the short-term maximization of profits.
Corporate venture capital
Corporate venture capital is the provision of risk capital for young companies by the venture capital departments of large corporations. With their investment in start-ups, the groups often pursue strategic and not only financial goals and thus differ from independent venture capital companies.
In the Anglo-Saxon world, the corporation is a term for a corporation.
In a cost coverage arrangement, one party to a transaction gives the other party to the transaction a commitment to reimburse all or part of the costs of a transaction.
A covenant is a contractual obligation to do something or not to do something. In a company acquisition agreement, for example, covenants are the obligations that must be fulfilled by the contracting parties before the agreement is signed and closed. This concerns, for example, the obligation of the seller to continue the business operations of the target company as before until the closing.
Credit enhancement refers to a mechanism by which the credit quality of a loan receivable or bond can be improved for rating purposes.
A credit facility is a credit line or loan made available.
A creeping takeover is a successive purchase of securities on the stock exchange until a certain investment threshold is reached.
Cross default is a termination clause that gives the lending bank a right of termination if a reason for termination arises under another contract or if the other contract is terminated.
The Cross-border Merger is an English term for a cross-border merger of companies.
CTA is the abbreviation for Contractual Trust Arrangement (see therefore Contractual Trust Arrangement).
Cultural Due Diligence
In a Cultural Due Diligence, the cultural compatibility on the part of the company buyer and the company seller is examined during the preparation of M&A.
Current Assests is the English name for current assets. Current assets include inventories, advance payments, marketable securities, receivables and cash and cash equivalents.
Current Liabilities is the English term for the current liabilities of a company.
The current ratio is the ratio of assets that can be liquidated in the short term to the short-term receivables of a company. The higher this ratio is, the better the company is able to repay short-term liabilities.