"I'm in between jobs" is an alternative way of saying "I was fired" or "I quit". It is a more positive way of seeing the situation than saying "I am unemployed"; you see opportunities and believe in your own capacity to control your future.
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Anglo-Saxon Boards of Directors consist in large part of members who are in management positions in the company, for example the CEO and heads of departments (2nd tier) reporting to the CEO.
The concept of Independent Director (ID) means a member of the Board of Directors who is independent of the management of the company and of the owners, a person who is not part of the company's executive management or closely allied with an ownership group.
An index is a fictional (imaginary) measure of a change in the economy. It is a statistical measure, and measures in percent. Examples are a securities exchange index (Dow Jones), an interest rate index (3-month Stibor), a raw materials index (Aluminium) or a currency exchange index (EUR/USD). Another common index is CPI (Consumer Price Index), which measure price changes over a specific period of time.
Indices are calculated from a base time period which is given the index 100. If a stock exchange index increases from 100 to 110 after a year this means that the shares on the exchange have gone up by an average of 10% during the year.
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When one industrial enterprise buys another enterprise so as to strengthen its position, expand its business, take advantage of synergies, etc.
Another type of acquisition is a financial takeover, when a financial investor (Venture Capitalist, investment company) acquires a company without industrial connections or advantages.
The term "inflation" means the percentage increase of the general price level from one point in time to another. In order to get an understanding of the price level, the changes in a large number of products (a basket with some 90 products and services) are measured over a specific period of time, which may be months, quarters, or years. The general price level is translated into a consumer price index (CPI) and is used, among other things, to adjust agreements, rents, support levels, etc.
High inflation usually means that the money supply in the country increases. The country's central bank prints new bills and increases its lending to the banks so as to facilitate investment and consumption. Increased money supply promotes inflation in that the purchasing power per currency unit (e.g., Euro) decreases.
Central banks can to some extent control the rate of inflation by increasing or decreasing the money supply and changing their lending rates (discount rates). A certain amount of inflation is considered healthy since it implies a positive confidence in future opportunities and growth in the economy. This is particularly true if price increases depend on increasing demand more than on the supply of products and services. Many central banks in developed countries aim for an inflation target of 2% per year.
Inflation means that the value of money decreases and that the purchasing power per currency unit is lower. In periods of high inflation, everyone with loans is a winner, since inflation makes the value of the loan decrease and helps to amortize the loan. In order to compensate for the decreases in value in times of high inflation, lenders demand ever higher interest rates. Therefore, interest rate levels are higher in periods of high inflation as compared with interest rates in periods with low levels of inflation. Low inflation, by contrast, is an advantage for those who save, since the purchasing power of the saved capital is relatively constant.
Inflation is an important measure for assessing the condition of a country's or a region's economy. Most decision-makers and economists watch for changes in the rate of inflation. Increasing inflation is generally seen as meaning that the state of the economy is on the way up. Low inflation may imply a poor economy, low growth and in extreme cases a crisis. Changes in inflation are thus well-correlated with the country's GNP (Gross National Product).
The causes of swings in the economy and in inflation are, of course, many. Economists collect data, analyze it and try to understand what macro-economic connections affect and drive the swings. The goal is to be able to foresee changes so as to be able to reduce their extent and their consequences in a timely manner. The ever more global and complex economy makes it more difficult to make predictions. There can be a boom in one part of the world at the same time as there is a bust, deflation and negative growth in another part. Compare, for example, the situation in Asia with Europe and the USA after the financial crash of 2008.
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An "Information Memorandum" (IM) is a document which gives a detailed description of a possible investment. An example is the IM which is prepared for a company in connection with a sale process (exit process) or a new securities issuance. The IM will describe the company's business, markets, customers, management, financial position, future plans and current ownership. It will also describe why an investment in the company is a good investment (the "investment rationale"). The IM can be seen as a fact-based sales brochure the purpose of which is to attract potential investors/buyers and give them a basis on which to evaluate the possible investment.
In a structured sale of an entire company, with several potential buyers, the IM will also constitute a basis for the first indicative bid. It is the chosen financial advisor which, together with the company's management, Board of Directors and owners, will prepare the IM.
It is a very extensive job to produce an IM, and it will contain the following parts:
An incubator is a centre for newly started enterprises, start-ups, which offers an infrastructure with office space, reception for visitors, and telephone and data networks. Also called "enterprise incubator". The purpose is to help an entrepreneur to get his or her enterprise started or to develop an idea into a first saleable product. An incubator may therefore contain professional help for:
An important part of an incubator is contact with the other enterprises in the incubator and the building of a personal network. Many technical universities have started incubators (so-called "technology parks") where the results of research and innovations from the university can be developed towards commercial use.
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Intangible assets or intellectual property, sometimes called invisible assets, that is, assets which cannot be physically touched. For example, these may be patents, trademarks, know-how or capitalized product development.
Intellectual property is particularly important in service oriented enterprises, while in manufacturing companies the fixed assets (for example, machines, production facilities, inventories) are still regarded as the most important assets.
Even in industrial companies, however, intellectual property is becoming ever more important since the physical products are becoming ever more alike. Businesses must thus build other values so as to be able to differentiate themselves, for example by their trademarks, product designs, etc.
An investment's "internal" annual return. The interest for each year is added to the capital which has been invested and the annualized capital (the original investment plus interest) is then the basis for the interest calculation for the next year. One thus calculates interest on the interest.
Example: If you invest €100 and receive interest of 10% you will have €110 after the first year. The second year's interest will then be calculated on the amount of €110 and will produce a new total amount of €121, which will in turn constitute the basis for year three. Equivalently, the calculations can be done backwards. Assume that you invest €100 in year one and have €121 after year two. You have had internal interest of 10%. Compare "IRR" (Internal Rate of Return).
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A financial advisor which helps enterprises with financing, conveyance of businesses, listing on securities exchanges, and so on. The investment bank may be either free-standing or part of a commercial bank. The investment bank often has its own analytics department for evaluating businesses, and also close contact with affluent clients to whom it offers potential investments.
The committee which, for example in a Venture Capital or Private Equity company, is to make the formal decision on an investment, a supplementary investment or if a sale (divestment) is to be made.
The committee is often composed of external, independent persons with experience in a variety of business areas.
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The general purpose of an "investment company" is the financial management of investments which are made in a number of companies. Investment companies often do not have a majority interest in the companies in which they invest and buy and sell shares for the purpose of earning money. The investments are principally in shares listed on securities exchanges.
The business concept of some investment companies is only to obtain the highest possible return and growth of value on their shares long-term. Their ownership share only amounts to a couple of percent. Other investment companies want to have a control position in the companies they invest in and therefore have so large an ownership share (often more than 10%) that they can affect the composition of the Board of Directors.
In some jurisdictions, companies which are classified as "investment companies" may have a tax advantage in that profits on the sales of shares may be tax-free income.
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An "investor" in a company usually means someone who invests his or her capital (buys shares) in order to obtain part of the company's return through owning part of it. Expected return is divided up partly into dividends and partly into price increases in the shares (value growth). But a lender to the company may, of course, also be seen as an investor.
An investor in shares has no security in the company's assets, which a lender often has. The company's lenders receive interest and also repayments (amortization) on their loans even if the company is operating at a loss and does not pay dividends to its shareholders. The owners, moreover, come last in line in the event of a distribution of the assets of a company (in liquidation, bankruptcy, etc.). The investors' capital is thus exposed to higher risk, a risk which must be compensated for by a higher return as compared with a lender's capital. Unless the risk is compensated for by a higher return, it is of course better simply to be a lender.
An abbreviation of "Initial Public Offering". IPO means that an enterprise will be listed on a stock exchange or on some other regulated market place. See further under "Listing on an exchange".
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IRR is an abbreviation of "Internal Rate of Return" and relates to an investment's internal annual return. Read more under "Internal interest".
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