Glossary of Financial Terminology


Acquisition – The acquiring of one corporate entity by another through the exchange of funds or securities.

Alternatives – A form of debt relief referred to in contemporary times as debt restructuring or forbearance.

Asset – A property or resource that holds financial value and is owned or controlled by an individual, corporation or country.


Bootstrap Transaction – An alternative term for Leveraged buy-out.


Capital structure – The description and relationship of how a corporation’s financing sources are structured.

Collateral – Assets or properties with monetary value that are offered as security in exchange for funds when raising debt finance.

Consolidation – The merger of several smaller corporate entities into one larger organization.


Debt Financing – Financing that is secured against bonds, bills or notes, promising the repayment of the principal with interest back to the creditor.

Debt Restructuring – The process of altering the terms of a debt agreement in order to achieve a financial advantage.


Expansion – Using capital and financial resources to expand and grow a corporation either in volume, product offerings or expanded territory.

Equity – A form of capital that represents the value of an ownership stake or interest in a property, corporation or asset.

Equity Financing – Financing that is raised in exchange for ownership interest in the corporation.


Finance – Describes the process by which assets, investments, debts, capital, money and banking are organized and managed.

Forbearance – The postponement of obligated payments on a financial debt in order to allow the debtor a period of time to make-up for outstanding payments.


HLT – An acronym for highly-leveraged transaction (HLT) which is an alternative term for leveraged buy-out.


Leveraged Buy-Out (LBO) – When a corporation is purchased through highly leveraged financing by way of borrowing against assets to raise the necessary purchasing funds.


Merger – The consolidation of two corporate entities through the exchange or transfer of securities.

Mezzanine Debt – A form of hybrid capital that is senior only to common shares and may incorporate certain characteristics of both debt-based and equity-based financing.


Recapitalization – The re-organization of a corporation’s capital structure.


Senior Debt – The first level of a corporation’s liabilities which is paid out first ahead of all other creditors.


WACC – An acronym for “Weighted Average Cost of Capital” which describes the average amount a corporation must pay out to its security holders in the form of interest.

Working Capital (WC) – A financial metric that determines a corporation’s operating liquidity which is calculated by subtracting a corporation’s current liabilities from its current assets.