Glossary

Facilities agent

A facility agent is a bank that assumes the administration of a syndicated loan against payment of a commission (agency fee).

Fact book

A fact book can also be called an exposé in German. It contains the description of a company, which serves to inform potential investors, e.g. before M&A processes. A Fact Book can contain general and specific company information, market analyses, financial figures and presentations of existing investment potential.

Factoring

Factoring refers to the sale of receivables to a financing institution (factor).

Fair Disclosure

Fair disclosure describes the way in which a circumstance must be disclosed to the buyer. This includes, for example, that the documents are correctly named and correctly classified in the course of due diligence.

Fairness opinion

If an investment bank takes a position on the question of whether the price of a company or part of a company in the context of a merger is justified from its point of view, this is called a fairness opinion.

Feasibility Study

A feasibility study serves to investigate the prospects of success of a measure.

Fairy Letter

The Fee Letter is a term for the agreement of two or more parties on what fees are paid for which services.

Final Bid / Final Offer

The term Final Bid can be described in English as the "last or final bid". In particular in the bidding process (auction process), bidders submit an offer for the next round of negotiations. On this basis, the seller decides with which bidders (or which bidder) the negotiations will be continued. Although the term suggests it, a final bid is usually not designed as a legally binding offer.

Financial assistance

Financial assistance describes the case in which the selling company helps the buyer to raise the purchase price. Such assistance is prohibited in many legal systems (example: Section 71a (1) of the German Stock Corporation Act).

Financial Covenants

Financial covenants are those provisions in a loan agreement that oblige the borrower to meet certain financial targets during the term of the loan.

Financial Debt

Financial debt is a collective term for all liabilities serving to finance a company (debt).

Financial due diligence

The financial due diligence is a sub-area of the company audit (due diligence). In the preparation of a company acquisition, the financial due diligence process involves in particular examining the assets, earnings and financial position of the target company.

Financial investor

A financial investor invests in target companies in order to generate a financial profit. With this objective, the financial investor differs from a strategic investor.

Financial round

The financing of venture capital investments takes place in so-called financial rounds. After the first round of financing, in which a start-up is provided with initial venture capital, further rounds of financing follow to finance its growth. In practice, these rounds are sequentially ordered according to the letters of the alphabet (Series A, B, C, etc.).

Financial statements

The Financial Statement is the American term for the annual or interim financial statements of a company.

Financing-out

The financing-out is a contractual reservation of financing. This means that the buyer can withdraw from the contract if he does not succeed in obtaining the loan funds required for the external financing of the purchase price.

Finding

If a risk is identified during the due diligence process, this is known as finding.

First demand guarantee

First Demand Guarantee means in English "guarantee on first demand". This means that someone who is claimed under a First Demand Guarantee must pay immediately and may not refuse payment on the grounds that the guarantee case did not occur. This question is then clarified in a subsequent recourse process.

Fixed Assets

Fixed assets are the assets of the fixed assets. These are goods that are available on a long-term basis, such as machinery and land. The counter term to fixed assets is current assets.

FLIP

A FLIP is a short-term investment, where the exit is determined before the deal is closed.

FLOP

A FLOP is a total failure of an investment. The FLOP is therefore the opposite of a high flyer.

Flow-to-equity

The flow-to-equity is that part of a company's cash flow that flows to the company's equity investors.

Framework agreement

A framework agreement is a framework contract that contains provisions that are to apply to several contracts.

Free cash flow

Free cash flow is the part of cash flow available to the company after deducting necessary investments (capital expenditure or CAPEX) and changes in working capital. The free cash flow is decisive for the calculation of enterprise value using the discounted cash flow (DCF) method.

Free Float

The proportion of shares that are in free float, i.e. not held by major investors and therefore freely tradable on the market, is known as free float.

Freeze-out

Freeze-out is an instrument that is used to force minority shareholders out of the company. This is not done by making use of a statutory exclusion option (squeeze-out), but by exerting pressure on minority shareholders, for example by not paying a dividend.

Friends and Family Program

When corporations, in issuing their shares, prefer certain persons close to them, such as employees, customers, business partners or family members of board members, this is called a friends and family program.

Fund

A fund is an investment fund that may only be used for specific purposes in accordance with legal or contractual requirements.

Fundraising

Fundraising is the process of soliciting private equity and venture capital companies and hedge funds for funds from investors (limited partners) for a newly invested fund.