BZT Dictionary®

Tag along

A contractual connection between shareholders. It entails that if a buyer offers to buy a shareholder's shares, the buyer must make the same offer to the other shareholders who are parties to the agreement. The other shareholders then have the right but not the obligation to "tag along" in the transaction.

Tag along is a protection for minority owners in case a majority owner sells her or his shares to an undesirable new owner. It also gives a minority owner an opportunity to sell his or her shares if there is a good offer.

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Teaser

A simplified, summary description of an investment opportunity. One example is a company teaser in combination with a sales process. It contains a short description of the investment opportunity, the company, its business and financial status. In this early stage the name of the company is not given. The teaser is given to potential buyers and investors in the company in an early, preparatory phase of the sales process and without their needing to sign a confidentiality agreement (NDA).

If the buyers/investors are tempted by the opportunity and thinks that the company and the investment opportunity are interesting, they can receive the more complete description in an "Information memorandum" (IM) in the next phase.

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Term sheet

A first agreement in which the parties agree on the fundamental terms and conditions for a transaction. A term sheet contains important, agreed terms and conditions for continued negotiation. This early agreement is also a first (acid) test which suggests whether or not there are conditions for a more comprehensive agreement. Compare with "Letter of intent" (LOI).

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Texas shoot-out

A Texas shoot-out can have different meanings depending on the situation. It is said to have its origin from dealings in cattle in Texas in the Wild West, and was then used with real firearms. In the business context it is a contractual arrangement the purpose of which is to loosen up a locked ownership situation with several owners. But no pistols of course!

A Texas shoot-out can start with one of the shareholders offering to buy the other owners' shares at a specified price. If those who receive the offer do not accept it, they must purchase the shares of the shareholder who first made an offer to buy their shares (who "drew first") at the same price and on the same terms and conditions.

The device leads to the offer (share price) being balanced, in that the owner who makes an offer to buy may be forced to sell her or his shares at the price she or he had offered to buy the shares for. It is thus not a good idea to make a "low ball" offer!

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TLA

The abbreviation TLA can clearly have many different meanings. Within the language of business TLA is used (with humour) as a collective designation for all "Three Letter Abbreviations" which are used.

It is very common to create new words which are abbreviations of some longer, more descriptive English concept -- sometimes altogether too often and too hard to understand. Among the most common TLAs are words from "the C-suite", i.e., CEO, CFO, and CTO. Other examples are M&A, GNP, B2B. Even CBS (Corporate Bullshit) is a TLA.

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Top line

The first line in the profit and loss statement, i.e., sales during a defined period.

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Track record

An informal list of qualifications which shows previous earnings by a company and its management. In recruiting processes, key persons with a good track record are sought. Investors look for companies with very good, improving earnings over a series of years and in which the management can show a good track record.

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Trademark

A trademark is a sign (symbol, word, letter combination etc.) that you recognize and associate with a company. The trademark must be in harmony with the image the branding is creating.

A trademark is designated by the letters TM (non-registered) or a ® for a registered and legally protected trademark.

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Trade sale

"Trade sale" is a sale of a company to a purchaser within its industry. Often the buyer is a larger company, which will obtain synergies from the combined business.

Tranche

Tranche is the French word for slice or divide up. The term is used to describe a structured financing of a company where the capital contribution is divided upon into parts (tranches).

In a business context, tranches may involve different types of financial instruments (loans, mezzanine, shares, etc.) with different terms and conditions and durations. It can also relate to capital contributions which are provided to the company in tranches as needed or when specific milestones are reached.

Compare with "Drawdown".

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Transaction value

The value of the entire transaction. Compare "Enterprise value".

Turn-around

Measures for turning around developments in a company which has fallen into serious difficulties. Very comprehensive measures are almost always needed to convert loss into profit.