Glossary

The terms you'll hear in interviews, with the US equivalent where it differs.

Accretion / dilution: Whether a deal increases (accretive) or decreases (dilutive) the buyer's earnings per share.
AIM: The London Stock Exchange's market for smaller, growing companies, with lighter rules than the Main Market.
Assessment centreUS: Superday: The final round: several interviews in one day, sometimes with a group exercise, case study or presentation.
AssociatesUS: Equity-method investments: Companies a business owns a significant minority stake in (usually 20–50%). Their profits aren't in EBITDA, so they're subtracted in the EV bridge.
Bank RateUS: Fed funds rate (closest equivalent): The Bank of England's main interest rate, set by its Monetary Policy Committee. It drives borrowing costs across the UK.
Beta: How much a share tends to move with the market. A beta of 1.2 means it moves about 20% more. Used in CAPM.
Bulge bracket: The largest global investment banks, offering advice, financing and trading, such as Goldman Sachs, J.P. Morgan and Morgan Stanley.
Capex: Capital expenditure: money spent on long-term assets like equipment and buildings. An investing cash outflow.
CAPM: Capital asset pricing model: cost of equity = risk-free rate + beta × equity risk premium.
Control premium: The amount a buyer pays above the current share price to take control of a company. It's why precedent transactions often value companies higher than trading comps.
Covenant: A condition in a loan agreement, such as a maximum net debt ÷ EBITDA. Breaking one can let lenders demand repayment.
CreditorsUS: Accounts payable: Money a company owes its suppliers.
DCF: Discounted cash flow: valuing a company as the present value of its future cash flows.
DCM and ECM: Debt capital markets and equity capital markets: the teams that help companies raise money by issuing bonds (DCM) or shares (ECM).
DebtorsUS: Accounts receivable: Money customers owe the company.
Deferred revenue: Cash received for goods or services not yet delivered. A liability until delivered.
Diluted shares: Shares in issue plus the extra shares that options, convertibles and similar would create, usually using the treasury stock method.
Due diligence: The detailed checks a buyer or investor does on a company's finances, contracts and risks before a deal.
EBITDA: Earnings before interest, tax, depreciation and amortisation. A rough proxy for operating cash flow, used in EV multiples.
Elite boutique: An independent advisory firm focused on M&A and restructuring advice without lending, such as Evercore, Lazard or PJT Partners.
Enterprise value (EV): The value of a company's core business to all its investors: equity value plus debt, preferred shares and NCI, minus cash and non-core assets.
Equity valueUS: Market capitalisation (for listed companies): The value of a company's shares: share price × diluted shares.
EV/EBITDA: Enterprise value divided by EBITDA: the most common valuation multiple, comparable across companies with different debt levels.
FCA: Financial Conduct Authority: the UK regulator for financial firms and markets.
FTSE 100 and FTSE 250: Indices of the 100 largest and the next 250 largest companies on the London Stock Exchange. Most FTSE 100 revenue is earned overseas; the FTSE 250 is more UK-focused.
GiltsUS: Treasuries (US government bonds): UK government bonds. Their yields are the usual UK risk-free rate in CAPM.
Goodwill: The amount paid for a company above the fair value of its identifiable net assets. Under IFRS it isn't amortised but is tested for impairment every year.
HireVue: A recorded video interview: you see a question, get a short time to think, then record your answer. Many banks use it as a first-round screen.
IFRS 16US: ASC 842 (US GAAP): The lease accounting standard. Puts almost all leases on the balance sheet and moves lease costs below EBITDA.
IFRS 18: New presentation standard from January 2027. Among other changes, IFRS cash flow statements start from operating profit.
IPO: Initial public offering: when a company first sells shares on a stock exchange. Later share sales are follow-on offerings.
IRR: Internal rate of return: the annualised return on an investment. The main return measure in private equity.
LBO: Leveraged buyout: buying a company with a lot of borrowed money, repaid from the company's own cash flows, usually by private equity.
Like-for-like sales (LFL)US: Same-store sales: Sales growth from stores open in both periods, stripping out new openings and closures.
MOIC: Multiple of invested capital: total money returned ÷ money invested.
Net debt: Debt minus cash. Added to equity value (with other claims) to get enterprise value.
Non-controlling interest (NCI)US: Minority interest: The share of a subsidiary owned by other shareholders. Added in the EV bridge because 100% of the subsidiary's EBITDA is consolidated.
Ordinary sharesUS: Common stock: The standard shares in a company, with voting rights and a share of profits.
P/E ratio: Share price divided by earnings per share. An equity value multiple, so it's affected by debt and interest.
Pitch book: The slides a bank prepares to win a client's business, usually with valuation work, deal ideas and the team's credentials.
Precedent transactions: Valuing a company from the multiples paid in past acquisitions of similar companies. Includes a control premium.
Preference sharesUS: Preferred stock: Shares paid a fixed dividend before ordinary shareholders, usually without votes. Added in the EV bridge.
Profit and loss account (P&L)US: Income statement: Revenue, costs and profit over a period.
Restructuring plan (Part 26A)US: Chapter 11 (closest equivalent): A UK court process (Companies Act 2006, added in 2020) that can bind dissenting creditor classes through a cross-class cram down.
Rights issue: Raising equity by offering existing shareholders new shares in proportion to their holdings. Common in the UK because of pre-emption rights.
Scheme of arrangement (Part 26): A UK court-approved compromise with creditors or shareholders, also used to carry out takeovers.
Sell-side and buy-side: In M&A, sell-side means advising the company being sold; buy-side means advising the buyer. In markets, the buy-side is investors such as funds.
Share premiumUS: Additional paid-in capital (APIC): The amount paid for shares above their nominal value.
SONIAUS: SOFR: Sterling Overnight Index Average: the UK's benchmark interest rate for loans and derivatives, which replaced sterling LIBOR.
Spring weekUS: Sophomore or early insight programme: A short insight programme, usually for first-year students, that can lead straight to a summer internship offer.
StockUS: Inventory: Goods held for sale, and the materials to make them.
Summer internship: A paid placement of around 10 weeks, usually in your penultimate year. Most graduate analyst offers come from it.
Synergies: Extra value from combining two companies: cost synergies (removing duplication) and revenue synergies (selling more). Investors trust cost synergies more.
Takeover Code: The UK rules for bids for listed companies, run by the Takeover Panel. Includes the 28-day "put up or shut up" deadline.
Trading comparablesUS: Trading comps: Valuing a company from the multiples that similar listed companies trade at today.
Treasury stock method: Counting dilution from in-the-money options: assume they're exercised and the proceeds buy back shares at today's price.
TurnoverUS: Revenue / sales: Total income from selling goods and services.
Unlevered free cash flow: Cash flow available to all investors, before interest: EBIT × (1 − tax) + D&A − capex − increase in working capital.
WACC: Weighted average cost of capital: the blended required return of debt and equity investors. The discount rate in an unlevered DCF.
Working capital: Short-term operating assets minus short-term operating liabilities (e.g. stock + debtors − creditors).