Hi here are 5 parts adapted from Dan Pena QLA summaries Anthony notes as the amount of content on this one blog is MASSIVE! I recommend you saving this link and digest it over a few reads. Also take actionable actions with it on yourself or your own business. I have included Part 1 : Important Life Lessons of Dan Pena Part 2 : 5 Points to prepare yourself to be an entrepreneur
Part 3 : Keys of GREAT COMPANY AND CEO by Dan Pena
Part 4 : 28 Rules of Business Litigation of QLA System
Part 5 : KEY Phrases of QLA System
Being high performance is a full time job! Dan Pena
Important Life Lessons of Dan Pena
1. 10x your goals
When I came back from Dan’s Castle seminar, my goals for London Real changed completely. I saw new possibilities in what this business could be, and I saw more potential in myself.
But now we are on our way to achieving some of those goals, Dan reminds me that it’s time to step it up once again.
Whatever you think is your most ambitious goal right now, times it by ten. Sometimes it feels like Dan is beating on me, but in truth, he’s a visionary. He sees possibilities where others see limitations.
2. Focus on the few
New goals mean tough decisions. You can’t please all the people all the time, and sometimes you have to make a call.
You have to be honest with yourself about works and what doesn’t.
Like Gary Vaynerchuk said about moving to SnapChat instead of Twitter, sentimental attachment can’t be allowed to get in the way of a good business choice. Double down on what works, and be brutal. Your time is short.
3. Don’t give tacit consent
This is something Dan said in our last interview, and it stuck with me. How many times in a day do you validate bad ideas, or give consent simply by avoiding a response?
It’s worrying right? By avoiding the awkward moment, or being afraid of saying no, you shoot yourself in the foot. You end up committed to projects you know don’t work, and you let people treat you badly. Don’t do this! Better to be honest and direct, than to be nice and let other people make decisions for you.
4. Stop wasting time!
Okay so it’s not like you haven’t heard this before. But even if you think you are pretty good at it, it’s important to remember you can always be better.
Each minute counts in high performance, and wasted time cannot be bought back. As Dan always says, simply being aware of how you invest you time is often enough to shock you into upping your game in this area. Keep yourself accountable.
Part 2 : 5 Points to prepare yourself to be an entrepreneur
1. Yesterday’s Dreams are Today’s Realities
Or, what you dream about today will be your reality tomorrow – if you don’t have a dream how can it come true! My personal example of this is Guthrie Castle – I dreamt of living in a castle, and visualized walking through each room, upon the grounds, in the garden – and this dream is now my reality – I live in a 15th Century storybook castle – Guthrie Castle, Scotland!
2. Seeing Dreams Ahead
It’s important to see yourself as you want to be – where you want to be – see yourself at the "goal line" – most people get stuck on the "rocky road’ – Focus on the Goal not the Road to get there, because the "road to success" is always under construction.
3. Simulation: Practice Within When You’re Without
People regularly practice playing a sport like golf or basketball – but few people think about "practicing being successful" – I had practiced meeting the Queen of England – what I would wear, how I would stand, the handshake, so when I did meet her I was comfortable – for I had practiced the moment for years. You should "practice" success before you reach your goal.
4. Act as if There are NO Limits to Your Abilities
I coach my mentees to act as if they are invincible – to act as if they could accomplish anything! Once one "acts" this way – they actually internalize the concept and start believing it themselves – I know one can accomplish much more than they usually ask of themselves; I always ask for more!
5. Enthusiasm: Greek God Within
Enthusiasm is from the Greek – meaning "God Within" – there is not one high performance person alive (or dead) who is not over enthusiastic about their business, their life – enthusiasm is contagious!
Looking at Dan Pena Savage Motivation Part 3 : Keys of GREAT COMPANY AND CEO by Dan Pena Passionate about what they believe in.. Recognise that they are genetically encoded for their chosen field of endeavour… they really LOVE what they do! and somebody WILL pay them for what they love to do!
Teams with the clearest sense of vision & impact WIN! Talent base – people…are the most important assets of new economy companies. Best question to ask a CEO…why would great people want to be part of your company? Customers will constantly raise “the bar of expectation” for companies. The internet is a giant “lab experiment” for corporate America and those companies that recognise this and play well within the rules of ambiguity & fluidity will survive and win. NOTHING IS CAST IN CONCRETE.
The best form of customer service is SELF service. Constantly empower customers to get their own answers themselves…this is a huge differentiator
“CLOCK SPEED” OF BUSINESS IS CONSTANTLY ACCELERATING…TIME REALLY MATTERS MORE THAN MONEY (MONEY YOU CAN SOMETIMES GET BACK, TIME YOU CAN’T) MOST EVEN BRIGHT UNDERESTIMATE THE VALUE OF TIME…THINK MORE IN TERMS OF “RETURN ON MINUTES”(ROM) THAN “RETURN ON INVESTMENT” (ROI).
Get in the digital game fast, no matter how small…”launch, listen, learn, then re-launch!
SIZE IS THE ENEMY OF SPEED! SPEED TO REACT MATTERS MORE THAN SIZE OF COMPANY…
Good leaders make sense of change in the world…then imparts that insight to the team.
SHIFTING THINGS (CHANGE) WHEN LIFE IS GOOD IS TOUGHER THAN WHEN THINGS ARE BAD, BUT YOU SHOULD CONSTANTLY BE SHIFTING…MORPHING.
People WANT to be led by strong leaders and good leaders are constant students.
THE JOB OF CEO’S IS NOT TO BE THE SMARTEST GUY IN THE ROOM, BUT TO ATTRACT OTHER SMART GUYS TO WORK FOR HIM. THE “GROUP BRAIN” IS FAR MORE POWERFUL THAN INDIVIDUAL BRAINPOWER.
Current accounting and measurement systems and metrics are outdated for new economy companies.
Human capital is the new currency of the digital economy.
Technical change is a sub-set of greater change – cultural change.
GOOD IS THE ENEMY OF GREAT!! When we get good, we usually quit.
GREAT DNA ENCODING OF PEOPLE AND VALUES (NOT IDEAS) IN YOUNG COMPANIES EARLY ON WILL CREATE THE TRULY GREAT AND LASTING COMPANIES LATER.
IT IS NOT IMPORTANT WHAT WE DO, BUT WHOM WE DO IT WITH…GREAT COMPANIES DIDN’T START WITH WHAT THEY PLANNED ON DOING, BUT THEY STARTED OUT GREAT BY WHO THEY PICKED TO DO IT WITH! People should get on your “bus” not for where you are going but BECAUSE THEY LIKE WHO IS RIDING ON THE BUS WITH THEM. The “bus” will also change directions, but the bonds of good people won’t.
ALWAYS PUT YOUR BEST PEOPLE ON THE BEST OPPORTUNITIES, not biggest problems.
“STOCKDALE PARADOX”… Admiral Stockdale survived 7 years of torture in Vietnam not by being overly “optimistic” of being rescued within weeks, but by being realistic of knowing it could be years. The other “optimistic” American POW’s around him died from broken expectations and hearts…of hoping to be rescued within weeks. REALISTS ARE BRUTALLY HONEST WITH THEMSELVES…YET THEY STILL HAVE AN UNWAVERING BELIEF THAT THEY WILL PREVAIL…”FAILURE IS NOT AN OPTION, EVEN IN THE FACE OF GREAT ADVERSITY…JUST KNOW WHAT YOUR ADVERSITY REALLY IS”!
CEO’S MOST IMPORTANT TASK…NEVER STOP BECOMING QUALIFIED FOR THE JOB.
FLYWHEEL EFFECT…when you start pushing a 10 ton metal flywheel, it takes lots of effort to make a single revolution, but less for the next 3…momentum will start to carry the wheel forward itself…same is true in business. It’s tough and slow to build momentum and inertia, but before long, it starts spinning under it’s own force. After a while, MULTIPLE REVOLUTIONS WILL CREATE EVOLUTION!
Use technology only after you have momentum, not to create it. Technology is simply an accelerator of momentum, not a creator of it
Building a great company means your building something WORTHY of lasting…QUESTION: HOW DO YOU KNOW IF YOUR COMPANY IS WORTHY OF LASTING??? ANSWER: DOES IT STAND FOR SOMETHING GREAT TO SOMEONE?
Dream now and then, they will come true!
GREAT COMPANIES DO 2 things well:
Preserves: core values and purpose.
Changes: operating practices, technologies and culture as needed.
Summary:
Human talent is the currency of the new economy.
Good is the ENEMY of great!
Time is more important than money (“ROM”)
Be a hedgehog!!! Unwavering single mindedness…
Know WHO you want on your “bus” in work & life…
Build something that is WORTHY and STANDS for something to someone…
Take time to dream…
Part 4: 28 Rules of Business Litigation: Choose your Battles: No one should sue over every wrong. Choose the Venue Be the Plaintiff: if you can’t be the Plaintiff, act like one—be the person getting ready for trial not being afraid of trial Have the Best Representation Listen to Your heart Don't listen to your sick stomach when you're out of your comfort zone. Don't listen to friends, relatives, et al Listen to experienced litigants – like me! Generally speaking, don't worry about the cost (THIS IS VERY HARD!). Just be sure you’re getting “bang for your buck” and not a lot of internal memos. Big lawsuits are better than small ones Elect jury trials, as opposed to a judge only: don’t be afraid to trust your fellow citizens. Preparation(yours) is key – KNOW THE FACTS Practice depositions and trials If you are thinking of a better strategy, get a new lawyer (not true in my case) NEVER GIVE UP Don't be intimidated by the process Use mock trials (pretend trials you do in front of a hired jury) Dress simple and conservatively in court – no jewelry except a wedding band, white shirt, plain tie and dark suit for men and the equivalent for women; short groomed hair for men. Everyone should show the proper respect for the judge and jury. Don't lose your temper in court – it's okay to cry if it's for real. Have your spouse in the front row every day. Children also if possible. Other family members in second row is okay. Your family needs to know what you’re going through. And there is nothing wrong with showing that you are a respected member of the community. No quotes to the press other than "We believe in our case and that is why we went to court". Your words can easily be distorted by a reporter in a hurry. When you break for lunch or recess, remember never talk in public about the case – you never know who might overhear. When you find a legal team that wins, STAY WITH THEM ALWAYS TELL THE TRUTH, No matter what. The truth will set you free! During videotaped depositions and in court, look at the camera. In court, look at the jury. Make eye contact. When testifying in a deposition or trial, if you don't know the answer, say you don't know the answer. Don’t guess. Keep in touch with your lawyers: ask them what’s going on each month at least. Don’t abandon your case to them and be sure you understand what they are doing. Don’t allow lawyers to shift in and out of the case: you want one team that learns, not new lawyers constantly coming “up to speed.” Like any other project management, litigation must be managed. That means you need to stay involved. Unfortunately, like speech-giving, you become a great litigant by going through a learning curve. I don't mean you have to get involved in losing efforts (like making bad speeches so after some time you make good speeches) to get in a position to win in court. Large law firms and experienced lawyers will allow you to get ahead of the learning curve. The Quantum Leap methodology talks ad nauseam about following your dreams. Life without dreams is like a bird with a broken wing – it can't fly. I wrote this newsletter because sometimes you'll need litigation to follow your dream. Go out and kick some butt if you have to, and don't let conventional wisdom keep you from achieving your dream. Conventional wisdom says Don't Litigate. All high-performance people and the great organizations of the last one hundred years did the opposite when they were in the right, and they still do litigate, as I write this letter. Don't litigate frivolously – but don't be afraid to protect what is right either. KEY Phrases Free Founders Equity your board must be what I call “lawsuit-aware.” Mission Statements tend to be pie-in-the-sky crap, there are some “magic words” you want to incorporate into this brief document to make it stand out from others. You want “dominate the industry,” for example, and become a “major force” in determining the future of that industry. “We’re going to consolidate a fragmented and cottage industry” tells the reader you plan to grow geometrically through acquisitions, an exiting prospect for any accounting firm which would like to grow its billings the same way. Do not confine yourself to a time frame—that’s a detail at this point. As a result, you have the opportunity to leverage your potential with regard to their fees. Accountants do not work on a contingency fee basis, with fees keyed to success or failure. “Independence” is extremely important to accounting firms, and is defined for them in the Generally Accepted Accounting Procedures (GAAP). So you talk to accountants about “value-added fees” and “success-oriented fees.” Underline these terms! They are very important phrases for you to use. During early ’96, I made presentations to a number of accounting firms, and in every instance, the partners immediately responded to those terms. I use the term “partners” because all my staff has equity of some sort It isn’t the people you fire who make your life miserable, it’s the People you don’t. For our purposes, a “deal” of another is an equity transaction that generates money income. It could be a public stock offering, or the acquisition of another company. Strategy follows Structure “I’ll go, ahead and have my people draw up the contract … its no problem.”
Part 5 : KEY Phrases of QLA System
TERMS YOU MUST KNOW Mezzanine Capital - In finance, mezzanine capital is any subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares. Mezzanine financings can be structured either as debt (typically an unsecured and subordinated note) or preferred stock.
Senior Debt - Senior debt is borrowed money that a company must repay first if it goes out of business.
Litigation - Litigation risk is the possibility that legal action will be taken because of an individual's or corporation's actions, inaction, products, services or other events.
Investment Interest is the cost of borrowing money, where the borrower pays a fee to the lender for using the latter's money. The interest, typically expressed as a percentage, can be either simple or compounded. Simple interest is based on the principal amount of a loan or deposit, while compound interest is based on the principal amount and the interest that accumulates on it in every period.
Conglomerate is a corporation made up of a number of different, seemingly unrelated businesses. In a conglomerate, one company owns a controlling stake in a number of smaller companies which conduct business separately.
Transaction is a deal that generates income
Trustee is a person or firm that holds or administers property or assets for the benefit of a third party. Trustees are trusted to make decisions in the beneficiary's best interests and often have a fiduciary responsibility to the trust beneficiaries.
IPO "Initial Public Offering” - refers to the process of offering shares of a private corporation to the public in a new stock issuance. Public share issuance allows a company to raise capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes share premiums for current private investors. Meanwhile, it also allows public investors to participate in the offering.
Brokerage - A brokerage company's main responsibility is to be an intermediary that puts buyers and sellers together in order to facilitate a transaction.
ROI Return on Investment - is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments.
Stock Exchange - is a stock clearinghouse which trades for the trading of publicly held equity.
Economics - Economics is a branch of social science focused on the production, distribution and consumption of goods and services.
Finance - is the study of money management and the process of acquiring needed funds. Personal finance, corporate finance, and public finance all falling under the umbrella of this broad term.
MBO "Management by Objectives” - is a strategic management model that aims to improve the performance of an organization by clearly defining objectives that are agreed to by both management and employees. According to the theory, having a say in goal setting and action plans encourages participation and commitment among employees, as well as aligning objectives across the organization.
EBO "Employee Buy-Out” - An employee buyout (EBO) is typically when an employer offers select employees a voluntary severance package.
SSO "Sponsored Spin-Out” - tax-efficient technique to acquire a substantial interest in a division or subsidiary of a public company
BOMB "Bring the Old Management Back” -MBO "Management Walk-Out” - MBI "Management Buy-In” - A management buy-in takes place when an outside manager team purchases an ownership stake in an outside company while keeping the existing management team.
BIMBO "Buy-In/Management Buy-Out” - Buy-In Management Buyout (BIMBO) is a form of a leveraged buyout (LBO) that incorporates characteristics of both a management buyout and a management buy-in. A BIMBO occurs when existing management — along with outside managers — decides to buy out a company. The existing management represents the buyout portion while the outside managers represent the buy-in portion.
IBO "Institutional Buy-Outs”- An institutional buyout (IBO) refers to the acquisition of a controlling interest in a company by an institutional investor such as a private equity firm, venture capital firm or financial institution such as a commercial bank.
Lender - A lender is an individual, a public or private group, or a financial institution that makes funds available to another with the expectation that the funds will be repaid. Repayment will include the payment of any interest or fees.
Bank - is a type of financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit(CDs) and savings accounts to individuals and small businesses.
Shareholder - A common shareholder owns part of a company via share ownership. They can vote on the direction of the company and have rights to declared common dividends.
Consolidate - To consolidate (consolidation) is to combine assets, liabilities, and other financial items of two or more entities into one.
Fragmented Industry - In economics, fragmentation is the use of different suppliers and component manufacturers in the production of a good. Fragmentation, also known as trade in Parts, Components, and Accessories (PCA), results in different companies producing component parts rather than the finished good, with the components assembled as a final product elsewhere.
Tax - a charge usually of money imposed by authority on persons or property for public purposes.
Capital - is a term for financial assets or their financial value as well as the tangible factors of production and facilities.
Capital Gain - is a rise in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.
Corporation - is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses: can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes. Some refer to it as a "legal person.
"VFM "Value for Money” - A utility derived from every purchase or every sum of money spent. Value for money is based not only on the minimum purchase price (economy) but also on the maximum efficiency and effectiveness of the purchase.
Acquisition - is a corporate action in which one company purchases most or all of another company's shares to gain control of that company.
Adjusted Cost of Capital - is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.
Principal - is a term that has several financial meanings. The most commonly used refers to the original sum of money borrowed in a loan or put into an investment.
Security - is a fungible, negotiable financial instrument that holds some type of monetary value. It represents an ownership position in a publicly-traded corporation—via stock—a creditor relationship with a governmental body or a corporation—represented by owning that entity's bond—or rights to ownership as represented by an option.
Merchant Bank - is a company that conducts underwriting, loan services, financial advising, and fundraising services for large corporations and high net worth individuals. Unlike retail or commercial banks, merchant banks do not provide services to the general public. They do not provide regular banking services like checking accounts and do not take deposits. These banks are experts in international trade, which makes them specialists in dealing with multinational corporations
Equity - is typically referred to as shareholder equity (also known as shareholders' equity) which represents the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company's debt was paid off.
Private Equity - is an alternative investment class and consists of capital that is not listed on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity. Institutional and retail investors provide the capital for private equity, and the capital can be utilized to fund new technology, make acquisitions, expand working capital, and to bolster and solidify a balance sheet.
Professional Fees - are prices charged by individuals specially trained in specific fields of arts and sciences, such as doctors, architects, lawyers, and accountants.
Law Firm - Business made up of lawyers that work together under a specific firm name
Accounting Firm - firm of accountants who provide accounting and auditing services for a fee.
CEO "Chief Executive Officer” - A chief executive officer (CEO) is the highest ranking executive of a firm. CEOs act as the company's public face and make major corporate decisions
CTO "Chief Technology Officer”- A chief technology officer is an executive who is responsible for the management of an organization's research and development as well as its technological needs.
CFO "Chief Financial Officer” - A chief financial officer (CFO) is the senior executive responsible for managing the financial actions of a company. The CFO's duties include tracking cash flow and financial planning as well as analyzing the company's financial strengths and weaknesses and proposing corrective actions. The CFO is similar to a treasurer or controller because they are responsible for managing the finance and accounting divisions and for ensuring that the company’s financial reports are accurate and completed in a timely manner.
COO "Chief Operating Officer” - is a senior executive tasked with overseeing the day-to-day administrative and operational functions of a business. The COO typically reports directly to the chief executive officer (CEO) and is considered to be second in the chain of command.
Chairman - chairman is an executive elected by a company's board of directors who is responsible for presiding over board or committee meetings. A chairman often sets the agenda and has significant sway as to how the board votes. The chairman ensures that meetings run smoothly and remain orderly and works at achieving a consensus in board decisions.
VP (Vice President) - One of the highest ranking employees in a company, just underneath the President of the company
Board of Advisors - Informal group composed of knowledgeable individuals who help guide the activities of a (usually) small or startup firm
Board of Directors - is a group of individuals elected to represent shareholders
Valuation - is the analytical process of determining the current (or projected) worth of an asset or a company.
Cycle - an interval of time during which a sequence of a recurring succession of events or phenomena is completed.
Due Diligence - is an investigation or audit of a potential investment or product to confirm all facts, that might include the review of financial records. Due diligence refers to the research done before entering into an agreement or a financial transaction with another party.
Deal Flow - describes the rate at which business proposals and investment pitches are being received by financiers such as investment bankers and venture capitalists.
Private Placement - A private placement involves the sale of securities to a relatively small number of select investors. Investors targeted include wealthy accredited investors, large banks, mutual funds, insurance companies and pension funds.
Venture Capitalist - is an investor that provides capital to firms exhibiting high growth potential in exchange for an equity stake. This could be funding startup ventures or supporting small companies that wish to expand but do not have access to equities markets. Venture capitalists are willing to risk investing in such companies because they can earn a massive return on their investments if these companies are a success.
Secured Debt - are those in which the borrower, along with a promise to repay, puts up some asset as surety for the loan. A secured debt instrument simply means that in the event of default, the lender can use the asset to repay the funds it has advanced the borrower.
Unsecured Debt - Unsecured debt has no collateral backing: It requires no security, as its name implies. If the borrower defaults on this type of debt, the lender must initiate a lawsuit to collect what is owed.
LIBOR (London Inter-bank Offered Rate) - is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans. LIBOR, which stands for London Interbank Offered Rate, serves as a globally accepted key benchmark interest rate that indicates borrowing costs between banks. The rate is calculated and published each day by the Intercontinental Exchange (ICE).
Junior Debt - is debt that has a lower priority for repayment than other debt claims in the case of default. Junior debt is considered to be a type of subordinated debt.
Subordinated Debt - is a loan or security that ranks below other loans or securities with regard to claims on assets or earnings. Subordinated debt is also known as a junior security or subordinated loan. In the case of borrower default, creditors who own subordinated debt won't be paid out until after senior debt holders are paid in full.
VAT "Value Added Tax” - is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed.
Merger - A merger is an agreement that unites two existing companies into one new company. There are several types of mergers and also several reasons why companies complete mergers. Mergers and acquisitions are commonly done to expand a company’s reach, expand into new segments, or gain market share. All of these are done to increase shareholder value.
Stock - is an investment that represents a share, or partial ownership, of a company.
Real Estate - is real—that is, tangible—property made up of land as well as anything on it, including buildings, animals, and natural resources.
Line of Credit - is an arrangement between a financial institution—usually a bank—and a customer that establishes the maximum loan amount the customer can borrow.
Deal - an agreement or an arrangement
Money - is a medium of exchange; it allows people to obtain what they need to live.
Credit Card - is a thin rectangular slab of plastic issued by a financial company, that lets cardholders borrow funds with which to pay for goods and services. Credit cards impose the condition that cardholders pay back the borrowed money, plus interest, as well as any additional agreed-upon charges.
SBA - the Small Business Administration (SBA) is an autonomous U.S. government agency established in 1953 to bolster and promote the economy in general by providing assistance to small businesses. One of the largest functions of the SBA is the provision of counseling to aid individuals trying to start and grow businesses.
Loan - A loan is money, property or other material goods given to another party in exchange for future repayment of the loan value amount with interest. A loan may be for a specific, one-time amount or can be available as an open-ended line of credit up to a specified limit or ceiling amount.
Collateral - is an asset that a lender accepts as security for a loan. If the borrower defaults on the loan payments, the lender can seize the collateral and resell it to recoup the losses.
Revenue - is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the top line or gross income figure from which costs are subtracted to determine net income. Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold. Revenue is also known as sales on the income statement.
Wealth - is a measure of the value of all of the assets of worth owned by a person, community, company or country.
NDA "Non-Disclosure Agreement” - is a legal contract between two or more parties that signifies a confidential relationship exists between them. The confidential relationship exists because the parties share information among themselves that should not be made available to any other parties outside of those involved, such as competitors or the general public or. An NDA may also be referred to as a confidentiality agreement.
Balance - is the amount of money present in a financial repository, such as a savings or checking account, at any given moment. It can also refer to the total amount of money owed to a third party, such as a credit card company, utility company, mortgage banker or other type of lender or creditor.
Seller Note - A form of debt financing used in small business acquisitions in which the seller agrees to receive a portion of the purchase price as a series of installment payments.
Pending - unfinished. not brought to an end or conclusion.
Business - is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities.
Property - is anything that a person or business has legal title over. Property can be either tangible or intangible, and having legal title to it grants the owner certain enforceable rights. Typical examples of a tangible property include real estate, also known as real property, vehicles, furniture, and equipment.
Success-Oriented Fees - A success fee is a compensation structure paid to an investment bank for successfully closing a transaction. The success fee is usually calculated as a percentage of the company's enterprise value, and is contingent on the completion of the deal. While the success fee may appear to be high, the fact that it is contingent on closing the deal aligns the investment banker with the seller's interest. The investment bankers take on some risk given that they don't get paid if the deal doesn't close. The fee itself should be a fraction of the increased purchase price that a top-notch investment banker should be able to get from prospective buyers.
Bank Account - A bank account is a financial account maintained by a bank for a customer.
Value-Added fees - One Big Four partner suggested they will bill only 50% of their hourly rate until we made a successful acquisition; then 100% and then play catch~up until they made their 50% balance. Another Big Four firm said they would wait for six months after our first transaction to begin full billing. The point is that accountants are flexible as long as the aura of professional "independence" is respected.
Short Sale - A short sale is the sale of an asset or stock that the seller does not own.
Entrepreneur - is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.
Profit - Profit is a financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity. Any profit that is gained goes to the business's owners.
Rich - having abundant possessions and especially material wealth.
Dividend - is the distribution of reward from a portion of the company's earnings and is paid to a class of its shareholders.
Diversified - Practice under which a firm enters an industry or market different from its core business.
OPM "Other Peoples Money"GAAP (Generally Accepted Accounting Procedures) - refer to a common set of accepted accounting principles, standards, and procedures that companies and their accountants must follow when they compile their financial statements. GAAP is a combination of authoritative standards (set by policy boards) and the commonly accepted ways of recording and reporting accounting information. GAAP improves the clarity of the communication of financial information.
Rate-of-return - is the net gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s initial cost. Gains on investments are defined as income received plus any capital gains realized on the sale of the investment.
NOLs (Net Operating Losses) - is a loss taken in a period where a company's allowable tax deductions are greater than its taxable income. When more expenses than revenues are incurred during the period, the net operating loss for the company can generally be used to recover past tax payments.
EVP (Employee Value Proposition) - is the balance of the rewards and benefits that are received by employees in return for their performance at the workplace.
Revenue - is the total amount of income generated by the sale of goods or services related to the company's primary operations.
Lending limit - is the maximum dollar amount that a single bank can lend to a given borrower. This limit is expressed as a percentage of an institution’s capital and surplus. The limits are overseen by the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC).
Branch-based lender - his is likely to be a "community" bank or a "hometown" bank, run by neighbours in the banking business." The loan committee is comprised of your individual banker, who becomes your advocate, and three or four other bank officials, directors or community business people
Intrastate bank - banking within state lines
Cash-on-cash rate of return - A cash-on-cash return is a rate of return often used in real estate transactions that calculates the cash income earned on the cash invested in a property. Put simply, cash-on-cash return measures the annual return the investor made on the property in relation to the amount of mortgage paid during the same year.
Payback Period - refers to the amount of time it takes to recover the cost of an investment. Simply put, the payback period is the length of time an investment reaches a breakeven point. The desirability of an investment is directly related to its payback period. Shorter paybacks mean more attractive investments.
Borrow - Receiving something of value in exchange for an obligation to pay back something of usually greater value at a particular time in the future.
Audited Financials - means a provider's financial statement that has been prepared in accordance with generally accepted accounting principles and that has been audited by an independent certified public accountant in accordance with generally accepted auditing standards and includes notes to the financial statement that state whether or not the community is in compliance with its reserve requirements.
Deposit - a financial term that has multiple definitions.On the one hand, a deposit is a transaction involving a transfer of funds to another party for safekeeping. On the other, a deposit also refers to a portion of funds used as security or collateral for the delivery of a good.
CD (Certificate of Deposit) - is a savings certificate with a fixed maturity date and specified fixed interest rate that can be issued in any denomination aside from minimum investment requirements. A CD restricts access to the funds until the maturity date of the investment. CDs are generally issued by commercial banks and are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per individual.
Long Term Debt - Long-term debt consists of loans and financial obligations lasting over one year. Long-term debt for a company would include any financing or leasing obligations that are to come due after a 12-month period.
Short Term Debt - Short term debt, also called current liabilities, is a firm's financial obligations that are expected to be paid off within a year. It is listed under the current liabilities portion of the total liabilities section of a company's balance sheet.
Asset - is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide a future benefit. Assets are reported on a company's balance sheet and are bought or created to increase a firm's value or benefit the firm's operations. An asset can be thought of as something that, in the future, can generate cash flow, reduce expenses, or improve sales, regardless of whether it's manufacturing equipment or a patent.
Operating capital - is a measure of a company's liquidity, operational efficiency and its short-term financial health. If a company has substantial working capital, then it should have the potential to invest and grow. If a company's current assets do not exceed its current liabilities, then it may have trouble growing or paying back creditors, or even go bankrupt.
Guarantee - is a type of guarantee from a lending institution. The bank guarantee means a lending institution ensures that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it. A bank guarantee enables the customer, or debtor, to acquire goods, buy equipment or draw down a loan.
Receivables - also referred to as accounts receivable, are debts owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.
Factoring - is an intermediary agent that finances receivables. A factor is essentially a funding source that agrees to pay the company the value of an invoice less a discount for commission and fees.
"A Paper" through "F Paper" receivable financingvoting shares - are shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors.
Corporate Bonds - is a debt security issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations. In some cases, the company's physical assets may be used as collateral for bonds.
Bond holder - is an investor or the owner of debt securities that are typically issued by corporations and governments. Bondholders are essentially lending money to the bond issuers. In return, bond investors receive their principal—initial investment—back when the bonds mature. For most bonds, the bondholder also receives periodic interest payments.
Fixed Rate of Interest - is an unchanging rate charged on a liability, such as a loan or a mortgage. It might apply during the entire term of the loan or for just part of the term, but it remains the same throughout a set period.
Subordinated Convertible Bonds - convertible subordinate note is a short-term debt security that can be exchanged for common stock at the discretion of the bondholder. It is a short-term bond that is convertible and ranks below other loans (it is subordinate to other debt). In the event the issuer becomes bankrupt and liquidates its assets, as a subordinate debt the convertible subordinate note will be repaid after other debt securities have been paid. As with all debt securities, however, the note will be repaid before stock.
Debenture - is a type of debt instrument unsecured by collateral. Since debentures have no collateral backing, debentures must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds.
Divestiture - is the partial or full disposal of a business unit through sale, exchange, closure, or bankruptcy. A divestiture most commonly results from a management decision to cease operating a business unit because it is not part of a core competency. A divestiture may also occur if a business unit is deemed to be redundant after a merger or acquisition, if the disposal of a unit increases the resale value of the firm, or if a court requires the sale of a business unit to improve market competition.
Royalty bond - A royalty fund is a category of private equity fund that specializes in purchasing consistent revenue streams deriving from the payment of royalties. One growing subset of this category is the healthcare royalty fund, in which a private equity fund manager purchases a royalty stream paid by a pharmaceutical company to a patent holder. The patent holder can be another company, an individual inventor, or some sort of institution, such as a research university. Royalties are a usage-based payment from one individual or entity to another individual or entity, giving the right to the use of an asset, product, service or idea.
Zero Coupon Bonds - is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value. Some bonds are issued as zero-coupon instruments from the start, while others bonds transform into zero-coupon instruments after a financial institution strips them of their coupons, and repackages them as zero-coupon bonds. Because they offer the entire payment at maturity, zero-coupon bonds tend to fluctuate in price, much moreso than coupon bonds.
Treasury Bonds - A Treasury bond (T-bond) is a marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest payments semiannually, and the income received is only taxed at the federal level. Treasury bonds are known in the market as primarily risk-free; they are issued by the U.S. government with very little risk of default.
Insurance Company - A business that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment or hardship in exchange for premium payments. The company calculates the risk of occurrence then determines the cost to replace (pay for) the loss to determine the premium amount.
Pension Funds - are investment pools that pay for employee retirement commitments. Funds are paid for by either employees, employers, or both. Corporations and all levels of government provide pensions. The fund managers invest these contributions conservatively. They must avoid losing the principal but still beat inflation.
Angels - is usually a high net worth individual who provides financial backing for small startups or entrepreneurs. Often, angel investors are found among an entrepreneur's family and friends. The funds that angel investors provide may be a one-time investment to help the business get off the ground or an ongoing injection to support and carry the company through its difficult early stages.
Private Foundation - is a charitable organization that, while serving a good cause, might not qualify as a public charity by government standards. A private foundation is a nonprofit organization that is usually created via a single primary donation from an individual or a business and whose funds and programs are managed by its own trustees or directors. As such, rather than funding its ongoing operations through periodic donations, a private foundation generates income by investing its initial donation, often disbursing the bulk of its investment income each year to desired charitable activities.
Public Funding vs Private FundingNet Worth - is a quantitative concept that measures the value of an entity and can be applicable to individuals, corporations, sectors and even countries. Simply stated, net worth is the difference between assets and liabilities. Positive net worth means that assets exceed liabilities while negative net worth describes the opposite scenario.
P/E (Price-to-Earning ratio) - is the measure of the share price relative to the annual net income earned by the firm per share. PE ratio shows current investor demand for a company share. A high PE ratio generally indicates increased demand because investors anticipate earnings growth in the future. The PE ratio has units of years, which can be interpreted as the number of years of earnings to pay back purchase price. PE ratio is often referred to as the "multiple" because it demonstrates how much an investor is willing to pay for one dollar of earnings. PE Ratios are sometimes calculated using estimations of next year's earnings per share in the denominator. When this happens, it is usually noted.
Forfeited - is the loss of any property without compensation as a result of defaulting on contractual obligations, or as a penalty for illegal conduct. Forfeiture, under the terms of a contract, refers to the requirement by the defaulting party to give up ownership of an asset, or cash flows from an asset, as compensation for the resulting losses to the other party. When mandated by law, as a punishment for illegal activity or prohibited activities, forfeiture proceedings may be either criminal or civil. The process of forfeiture often involves proceedings in a court of law.
Loyalties - Measure of commitment based on obligation or, in consumer preferences, degree of satisfaction.
Points over prime - Though each of the three main credit bureaus - Equifax, Experian and TransUnion - have the same overall range of credit scores (300 to 850), the credit score range that is considered prime may vary. Consumers with scores at the highest end of these ranges are considered to have super-prime credit, and consumers whose scores fall just below that range are considered to have prime credit. Below that comes near prime and sub-prime, the lowest score with the least advantageous terms when it comes to loans.
Basis Points - refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01%, or 0.0001, and is used to denote the percentage change in a financial instrument. The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and 0.01% = 1 basis point.
equity transaction - means any transaction in Shares that qualifies as equity under applicable accounting rules.
Value - Business value expands concept of value of the firm beyond economic value (also known as economic profit, economic value added, and shareholder value) to include other forms of value such as employee value, customer value, supplier value, channel partner value, alliance partner value, managerial value, and societal value. Many of these forms of value are not directly measured in monetary terms.
Diluting - Dilution occurs when a company issues new stock which results in a decrease of an existing stockholder's ownership percentage of that company. Dilution can also occur when holders of stock options, such as company employees, or holders of other optionable securities exercise their options. When the number of shares outstanding increases, each existing stockholder owns a smaller, or diluted, percentage of the company, making each share less valuable.
Ownership - The ultimate and exclusive right conferred by a lawful claim or title, and subject to certain restrictions to enjoy, occupy, possess, rent, sell, use, give away, or even destroy an item of property. Ownership may be corporeal (title to a tangible object such as a house) or incorporeal (title to an intangible object, such as a copyright, or a right to recover debt). Possession (as in tenancy) does not necessarily mean ownership because it does not automatically transfer title.
SMBO (Secondary Management Buyout) - In a secondary buyout, a financial sponsor or private equity firm sells its investment in a company to another financial sponsor or private equity firm, thereby ending its involvement with the company. Historically, secondary buyouts have been perceived as "panic" sales and, thus, sometimes hard to consummate. Secondary buyouts are not the same as secondary market purchases, or "secondaries," which typically involve the acquisition of entire portfolios of assets.
Purchase - means to take possession of a given asset, property, item or right by paying a predetermined amount of money for the transaction to be completed successfully. In other words, its’ an exchange of money for a particular good or service.
Cash-Flow - is the net amount of cash and cash-equivalents being transferred into and out of a business. At the most fundamental level, a company’s ability to create value for shareholders is determined by its ability to generate positive cash flows, or more specifically, maximize long-term free cash flow.
Liquidate - means to convert assets into cash or cash equivalents by selling them on the open market. Liquidate is also a term used in bankruptcy procedures in which an entity chooses or is forced by a legal judgment or contract to turn assets into a "liquid" form (cash). In finance, an asset is an item that has value.
Market Value - is the price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization of a publicly traded company, and is obtained by multiplying the number of its outstanding shares by the current share price. Market value is easiest to determine for exchange-traded instruments such as stocks and futures, since their market prices are widely disseminated and easily available, but is a little more challenging to ascertain for over-the-counter instruments like fixed income securities.
Income Capitalization - The income approach is a type of real estate appraisal method that allows investors to estimate the value of a property based on the income the property generates. It’s used by taking the net operating income (NOI) of the rent collected and dividing it by the capitalization rate. It’s also known as the income capitalization approach.
Discounted value of future cash flow - Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its future cash flows. DCF analysis attempts to figure out the value of a company today, based on projections of how much money it will generate in the future. DCF analysis finds the present value of expected future cash flows using a discount rate. A present value estimate is then used to evaluate a potential investment. If the value calculated through DCF is higher than the current cost of the investment, the opportunity should be considered.
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