Investment Banking

Credit Rating

An independent opinion on how likely a borrower is to repay its debt on time.

Dilution

The fall in existing owners' percentage stake when new shares are issued.

Due Diligence

A detailed investigation of a business before a deal is signed.

Investment Banking

Advisory and capital-raising services for companies, governments and investors.

Mergers & Acquisitions

M&A

Combining companies, or one company buying another.

Pitch Book

The presentation a bank prepares to win a deal mandate from a client.

Anchor Investor

A large institutional investor allotted IPO shares a day before the issue opens to the public.

Book Building

The process of discovering an issue price by collecting investor bids within a price band.

Comparable Company Analysis

Trading comps

Valuing a company by comparing it with similar listed companies' multiples.

Control Premium

The extra amount a buyer pays above the market price to gain control of a company.

Debt Capital Markets

DCM

The team that helps companies and governments raise money through bonds.

Enterprise Value

EV

The value of a whole business to all its investors, lenders and shareholders.

Equity Capital Markets

ECM

The team that helps companies raise money by issuing shares.

EV/EBITDA

Enterprise value divided by EBITDA: the most common deal valuation multiple.

Leverage

Using borrowed money to increase the potential return on your own capital.

Precedent Transaction Analysis

Deal comps

Valuing a company using multiples paid in past acquisitions of similar firms.

QIP

Qualified Institutional Placement

A fast way for a listed Indian company to raise money by selling shares only to qualified institutions.

Synergies

Extra value created when two companies combine, through cost savings or higher revenue.

Accretion / Dilution Analysis

Checking whether a deal raises or lowers the buyer's earnings per share.

CAPM

Capital Asset Pricing Model

A formula to estimate the return shareholders expect, based on market risk.

Discounted Cash Flow

DCF

Valuing a business as the present value of the cash it will generate in future.

Leveraged Buyout

LBO

Buying a company using a large amount of borrowed money, repaid from its own cash flows.

Terminal Value

The value of all cash flows beyond the explicit forecast period in a DCF.

WACC

Weighted Average Cost of Capital

The blended return a company must pay to its lenders and shareholders.