The Startup Lingo Guide

Accelerated vesting is the early vesting of equity not yet earned, usually on a company sale, under a single or double trigger.

An accelerator is a time-limited support programme that guides startups in cohorts with capital, mentors and investor contacts, often in return for equity.

Accounting covers recording, evaluating and planning a company's figures, externally for third parties and internally for management.

An accounting system is a structured framework for recording, processing, and reporting financial transactions to support business decision-making, compliance, and strategic growth.

Accounts payable accounting is the part of bookkeeping that records, checks, approves and pays supplier invoices (liabilities).

Accounts receivable accounting is the part of bookkeeping that records, monitors, collects and values open invoices to customers (receivables).

An acqui-hire is a company acquisition in which the acquirer mainly wants the team; the target's product and revenue are secondary.

ACV (annual contract value) is the value of a single customer contract expressed per contract year, with or without one-off fees depending on the definition.

Adjusted EBITDA is earnings before interest, taxes, depreciation and amortisation without one-off and special items. It shows sustainable operating earning power.

Amortisation is the systematic allocation of the cost of a loan or intangible asset over its useful life through periodic payments or write-offs.

Amortization describes the return of the capital invested in an investment and, following English usage, the write-down of intangible assets.

An anchor investor is the first investor to commit a significant amount firmly, making it easier for others to join a round, fund or IPO.

An angel investor (business angel) is a wealthy private individual who invests their own money in young companies and contributes experience and contacts.

An angel syndicate is an association of business angels who invest pooled through a company under the lead of an experienced investor.

The annual financial statement under the HGB is a company's yearly report of figures: balance sheet and income statement, plus notes for a GmbH.

The annual report summarises a financial year and combines the annual financial statements and management report with voluntary company information.

Anti-dilution protection is the safeguard that compensates investors with additional shares in a follow-on round at a lower share price.

AOV (average order value) is the average value of an order, calculated as the revenue of a period divided by the number of orders.

An API (application programming interface) is a programming interface through which software systems exchange data and functions under fixed rules.

ARPA (average revenue per account) is the average recurring revenue per paying customer account, usually MRR divided by the number of customers.

ARR (annual recurring revenue) is the recurring annual revenue from running customer contracts at a reporting date, usually MRR times twelve.

An asset deal is a company purchase in which the buyer acquires individual assets, contracts and rights instead of the shares in the company.

Assets are the items on the left-hand side of the balance sheet, such as fixed and current assets. They show where capital is tied up; liabilities and equity show where it comes from.

An assignment clause governs whether a party may pass its claims to a third party or transfer the entire contract to another.

An auction process is a structured sale process in which several prospective buyers bid to a fixed timetable and uniform rules.

Auditing mainly means the independent examination of annual financial statements and management report, with the auditor's opinion as its result.

B2B factoring is the sale of receivables from businesses and public-sector clients to a factor in order to pre-finance long payment terms.

A bad leaver is a founder or employee who leaves for a reason attributable to them and must give up their shares below fair market value.

A balance sheet sets a company's assets against their financing from equity and debt at a reporting date.

A barter deal is an exchange: service for service instead of money, such as advertising, software or consulting between two companies.

Benchmarking (German: Leistungsvergleich) is the comparison of own metrics with values from the company's past, competitors or the industry.

Benchmark valuation determines a company's value using comparison values, above all valuations of comparable companies in funding rounds.

The Blue Ocean Strategy is a strategic approach that opens up new demand in an uncontested market space instead of competing for existing customers.

A board meeting is the session of the advisory board or supervisory board in which management reports and the body advises, oversees and resolves.

A board seat is a seat with voting rights on an advisory or supervisory board, usually for an investor. In a GmbH, the articles of association govern the body's powers.

Bookkeeping is the ongoing, document-backed recording of all of a company's business transactions, such as sales, purchases and payments.

Bootstrapping is building a company without investors who receive shares for their money, financed from the founders' funds, revenue and profits.

Bottom-up market sizing builds a market size from the verifiable number of potential customers per segment times the annual revenue per customer.

Break-even is the point at which revenue exactly covers all costs, so that neither profit nor loss arises. It can be stated as a quantity sold or as revenue.

A break-up fee is a payment by the seller side to the prospective buyer if a transaction fails for reasons agreed in advance.

Bridge financing is a short-term financing for a limited capital need until a funding round, a sale or follow-on financing.

The bridge round bridges the time between two equity rounds, usually with a convertible loan from the existing investors.

A bring-down certificate is the seller's confirmation on the day of completion that the warranties in the purchase agreement are still accurate.

Budgeting is the setting of binding target figures for the revenue, costs and investments of a financial year, broken down by department and month.

The budget vs actual comparison sets a period's achieved figures against the planned ones; the variance is actual minus plan. It is shown in euros and in percent.

Burn rate is the monthly outflow of liquid funds: gross, all payments out; net, payments out less receipts from the business.

In tax law, business assets comprise the assets allocated to a business, as distinct from the entrepreneur's private assets.

The business management evaluation (BWA) is a monthly summary of the accounts showing revenue, costs and the preliminary result.

A business owner's will is a will or inheritance contract regulating succession to company shares, coordinated with the articles of association.

A business plan is the overall document on a company's strategy, market, organisation and planning, including capital requirement and risks.

Business relief exempts business assets from inheritance or gift tax at 85% or 100%, subject to a payroll rule and a holding period.

A business split exists when a shareholder makes an essential asset available to the GmbH they control; the letting becomes commercial.

Business succession is the transfer of a company's ownership and management to family, management or a buyer, during life or on death.

Business valuation determines the value of a company or its shares, usually from future surpluses or the prices of comparable companies.

Buy-and-build is a growth strategy, mainly of private equity investors: buying an established company and expanding it through smaller acquisitions.

A buyer persona is a profile, distilled from customer conversations, of a role involved in a purchase, with goals, triggers, objections and authority.

The CAC payback period counts the months until a new customer's gross profit covers the cost of acquiring the customer. As a rule of thumb, under twelve months is considered good.

A camel is a growth company that grows with low capital consumption and can survive periods without new funding from its own liquidity.

Capex and opex distinguish investments that are capitalised and depreciated over years from running costs that reduce earnings immediately.

A capital increase raises the share capital of a GmbH: new shares are created against a contribution. This is how investors enter funding rounds.

The cap table (capitalisation table) shows who owns which shares in a startup, including virtual shares, options and convertible loans.

Career planning sets out the paths along which employees can develop in a company, with levels, criteria, salary bands and succession.

The cash conversion cycle (CCC) measures in days how long capital is tied up in the business: days inventory plus days receivable minus days payable.

Cash flow is the net amount of cash and cash equivalents moving into and out of a business during a specific period.

Cash flow positive means that a company takes in more from its business than it pays out, and its liquid funds grow without new capital.

A cash flow projection is the multi-year forecast of a company's cash flows. It is usually derived from the earnings and balance sheet planning in the financial model.

The cash flow statement shows where a company's money came from in a year and where it went, split into operations, investing and financing.

Cash-free/debt-free is a purchase price rule: the buyer bids for the company without debt or bank balances, and both are settled against the price.

A Center of Excellence pools expertise, methods and standards on one topic and makes them available to other business areas.

CFO (Chief Financial Officer) is the head of the finance function, responsible for accounting, planning, liquidity and financing.

A change of control is a shift in control over a company, usually by acquiring the voting majority, that triggers special contractual rights.

The churn rate measures the share of customers or revenue lost in a period. What matters is the distinction between customer churn and revenue churn.

Closing conditions are prerequisites of a company purchase, such as merger clearance, that must be met between signing and closing.

A cockroach is a young company that survives long periods without new funding thanks to low cash use and an adaptable business model.

Cohort analysis groups customers by the month they joined and tracks each group separately over time. This shows whether newer customers stay longer than older ones.

A co-investor joins a funding round on the terms negotiated by the lead investor, without leading the round.

Collateral comprises rights that give a lender access to assets or third parties on default, such as a land charge, global assignment or surety.

Common stock is the ordinary share class without preferential rights; in a GmbH, the equivalent common shares rank after all preferences on a sale.

A company builder founds companies from its own ideas, builds them with capital and shared services and often holds the majority at the start.

Completion accounts are drawn up as at the closing date and fix the final purchase price of a company acquisition after a provisional payment.

Contract research is the commissioning of research or development work from third parties for a fee. Under the research allowance, part of the fee counts.

The contribution margin (Deckungsbeitrag) is revenue less variable costs, which contributes to covering fixed costs and to profit.

Controlling supports management in steering the company. Its tasks are planning, budget-versus-actual comparison, forecasting, cost accounting and reporting.

A control premium is the surcharge on the value per share that an acquirer pays to gain control of a company through its stake.

A conversion trigger is the contractually defined event that causes a convertible loan or SAFE to convert into shares in the company.

A convertible loan is a loan to a company that is not repaid on an agreed event but converted into shares of the company.

Corporate venture capital refers to stakes that established companies take in young firms, combining financial return with strategic benefit.

A co-sale agreement is a US-style contract on rights of first refusal and co-sale; in Germany, the shareholders' agreement governs both.

Covenants are loan agreement conditions, such as financial ratios and conduct or reporting duties, whose breach gives the lender termination rights.

A cramdown is a financing round at a sharply reduced valuation or the overriding of dissenting groups in an insolvency or restructuring plan.

Creditworthiness (German Bonität) is a company's ability and willingness to meet its payment obligations in full and on time.

A CRM (customer relationship management) is the system in which customers, contacts, sales opportunities and activities are managed and analysed.

Crowdfunding is the financing of a project by many individuals through a platform, as a donation, for a reward, for a stake or as a loan.

CSAT (Customer Satisfaction Score) measures satisfaction with a specific service, usually as the share of satisfied answers on a five-point scale.

The Chief Technology Officer (CTO) is a senior executive responsible for overseeing an organization's technological innovation, strategy, and implementation to drive business growth and competitive advantage.

Current assets are items used up, sold or turned into cash in the ordinary course of business, such as inventories, receivables and cash.

A data processing agreement governs under Article 28 GDPR how a service provider processes personal data on a company's instructions.

A data room is the protected, organised repository of documents that investors or buyers review in due diligence before a contract is concluded.

A DCF valuation values a company at the present value of its future free cash flows, discounted at the cost of capital, plus a terminal value.

Debt capital is the money a company owes to its creditors, shown on the balance sheet as provisions and liabilities.

The debt ratio is the ratio of a company's debt to its equity or, as the dynamic debt ratio, to its operating earnings (EBITDA).

Debt service capacity is the lasting ability to pay interest and repayments from the business; banks measure it by the debt service coverage ratio.

A decacorn is an unlisted growth company that investors value at at least USD 10 billion in a financing round.

Default alive means that a company, at its current growth and unchanged costs, reaches break-even before its funds run out.

The definitive agreement is the final, binding transaction contract that replaces the LOI or term sheet; a purchase of GmbH shares must be notarised.

The de minimis threshold is the minimum claim size in a company purchase: individual claims by the buyer below this amount trigger no seller liability.

Dilution is the reduction in existing shareholders' percentage ownership when new shares are issued, for example in a funding round.

A direct listing admits existing shares to exchange trading without bank placement; unlike an IPO, the company usually receives no capital.

A disclosure schedule is the annex to a purchase or participation agreement in which the seller states exceptions to its warranties.

The discount rate converts future payments into their present value and is derived from the cost of capital.

A down round is a funding round in which new shares are issued at a lower price per share than in the previous round.

Drag-along rights oblige minority shareholders to sell on the same terms when an agreed majority sells the company.

The drop-dead date (long stop date) is the latest date by which a company purchase must close; after it, the parties may withdraw.

Due diligence is the systematic review of a company by investors or buyers before an investment or purchase in order to assess risks.

Early crisis detection is the managing directors' duty under Section 1 StaRUG to monitor threats to the company's survival and counteract them.

An earn-out is a conditional part of the purchase price, paid after closing if the company sold reaches agreed targets.

EBIT is profit before interest and taxes but after depreciation and amortisation. It measures the operating result regardless of financing, for example as the EBIT margin.

EBITDA is profit before interest, taxes, depreciation and amortisation. It measures operating earning power and underpins margins, valuation and loan covenants.

The EBITDA multiple is enterprise value divided by EBITDA, a common yardstick in company purchases. EBITDA is the result before interest, taxes, depreciation and amortisation.

Enterprise value (German: Unternehmenswert) is the value of a company's operating business, whether financed with its own money or with loans.

The entire agreement clause (Vollständigkeitsklausel) declares the contract the complete agreement; under German law side agreements remain provable.

Equity in a scale-up is capital from founders and investors without fixed repayment. Advantages, dilution and role in the capital structure.

The equity bridge is the reconciliation from enterprise value to the value of the shares: debt is deducted and freely available cash is added.

The equity ratio is the share of equity in total capital. It shows how much loss a company can absorb before creditors are affected.

The equity story is a company's investment rationale for investors and buyers, built from market, competitive position, growth levers and evidence.

Equity value is the value of all shares: enterprise value less debt and debt-like items, plus freely available cash and cash equivalents.

An escrow account is an account on which a neutral third party holds part of the purchase price in a business acquisition until an agreed release.

An ESOP is a programme that gives employees a share in a company's growth in value, in German growth companies mostly as a virtual programme (VSOP).

The exclusivity period is the agreed phase in which a company negotiates the transaction with only one investor or buyer.

The exercise period is the period in which earned employee options can be exercised before they lapse once the deadline expires.

The exit multiple is the multiple of a metric such as EBITDA or revenue at which a company is expected to be valued in a future sale.

Factoring is the ongoing sale of receivables to a factor, which advances the money immediately and, in true factoring, also bears the default risk.

Fair market value is the price independent parties pay in a normal sale without compulsion; for tax purposes, the common value (gemeiner Wert).

A family office manages the wealth of one or more wealthy families and often also invests directly in unlisted companies.

A fiduciary out allows the governing body of a target company, under US practice, to respond to a superior offer despite a no-shop obligation.

Finance as a Service (FaaS) is an outsourced model where businesses subscribe to cloud-based financial solutions for managing accounting, analytics, and compliance, enabling cost-effective and scalable financial operations.

Financial accounting covers the recognition, measurement and presentation of assets and liabilities in the balance sheet under the German HGB.

A financial health check is a structured review of a company's financial position and finance function, with findings and measures.

Financial management is the strategic process of planning, organizing, directing, and controlling financial resources to achieve personal, organizational, or business financial goals efficiently and effectively.

A financial model calculates a company's income, balance sheet and liquidity over several years and in scenarios from a set of assumptions.

Financial planning is the connected forecast of a company's income, liquidity, investments and financing over several years.

Financial storytelling is the art of transforming complex financial data into a compelling narrative to engage stakeholders, clarify business strategy, and drive informed decision-making.

Fixed and variable costs distinguish costs by whether they stay the same or change as the quantity sold rises or falls.

A follow-on investment is a further investment by an existing investor in the same company, usually in a later funding round.

A forecast combines the figures achieved so far with the current expectation for the remaining months of a period.

A founders agreement is the contract in which founders set out roles, shares, the gradual earning of shares and the consequences of a departure.

A fractional CFO is an experienced part-time head of finance who serves several companies in parallel, typically a few days a month.

Free cash flow is the cash surplus from ongoing business after investments, available for capital providers, repayment or growth.

Freemium is a pricing model in which a basic version is free permanently and revenue arises only from paid extensions or higher tiers.

A full ratchet is anti-dilution protection that reduces an investor's entry price entirely to the lower price of a later round.

Fully diluted is the way of counting that includes, besides issued shares, all rights from which shares or claims to proceeds may later arise.

A fully diluted cap table is the ownership table showing, per holder, company shares, virtual shares, pool and conversion rights.

The fully diluted valuation is a round's valuation: price per share times all shares, including the employee pool and conversion rights.

A good leaver is a founder or employee whose departure the contract does not hold against them and who therefore keeps their earned stake.

Goodwill (German: Firmenwert) is the part of the purchase price of a company that exceeds the value of the acquired assets less the liabilities.

A go-shop provision allows a target company, following US practice, to actively seek better offers for a short period after signing.

Governing law is the law by which a contract is judged; under the Rome I Regulation, the parties can choose it largely freely.

Governing law & jurisdiction sets which law applies to a contract and whether a state court or an arbitral tribunal decides disputes.

The grant award notice approves funding and sets the conditions. The ancillary provisions matter more than the approved amount.

Gross margin is the share of revenue left after deducting the direct costs of the goods or services sold: (revenue minus cost of revenue) / revenue.

Growth capital is equity for more mature companies with a proven business model, usually as a minority stake to finance further growth.

A growth experiment is a time-limited trial that tests a growth assumption with a hypothesis and a predefined success criterion.

A GTM strategy (go-to-market strategy) sets out the offer, price and sales channel with which a company wins a clearly defined customer group.

A guarantee facility is a surety or guarantee that a bank issues on a company's behalf to third parties instead of paying out money.

The headcount plan sets out which positions a company fills from when and what they cost, ancillary costs included. It is a core building block of the financial model.

A hell or high water clause, from US practice, obliges the buyer to accept any condition required to clear a company acquisition.

A holding structure is an arrangement in which one company holds shares in operating companies; for founders, usually their own holding GmbH.

An HR business partner is an HR professional permanently assigned to a business unit who advises its leadership on all people matters.

Human resources (HR) is a company's personnel function: planning, hiring, administration, compensation, development and separation of employees.

An ICP (Ideal Customer Profile) describes, by verifiable criteria, the company type that gains most from an offer and is worth most as a customer.

The income statement compares the income and expenses of a financial year and thereby shows the profit or loss for the year.

Income tax (Ertragsteuer) is the umbrella term for taxes on profit and income: in Germany personal income tax, corporate income tax and trade tax.

An incubator supports start-ups and founding projects over a longer period with premises, infrastructure and advice, often without taking equity.

Indemnification is the contractual undertaking by which a seller in a company purchase assumes specific risks such as taxes or legal disputes.

An indemnity basket is the threshold amount in a company purchase that warranty claims must together exceed before the seller becomes liable.

Information rights entitle shareholders and investors to information, inspection and reports, in a GmbH under Section 51a GmbHG and by contract.

Inheritance and gift tax taxes the transfer of assets without consideration, on death or by gift, by tax class, allowance and value.

An initial coin offering (ICO) is the sale of newly created digital tokens on a blockchain to finance a project, usually without shareholder rights.

An innovation loan is a low-interest promotional loan from KfW or a regional development bank for innovation projects, applied for via the house bank.

Integrated financial planning links the planned income statement, balance sheet and liquidity so that each assumption affects all three.

Integration planning is the planning of how an acquired company is merged with the buyer after the takeover and how synergies arise.

An interim CFO is a temporary head of finance who runs the finance function full time for a limited period. Often appointed managing director or given Prokura.

Interim management is the temporary assignment of an executive who takes on a leadership role with decision authority and responsibility for results.

Inventory turnover shows how often the average stock of goods is sold in a year. It is calculated as cost of goods sold divided by average inventory.

INVEST is a federal grant for private investors who take stakes in young innovative companies. It reduces their risk, not the company's capital need.

The investment agreement is the umbrella term for the contract package of a funding round, chiefly the participation and shareholders' agreements.

Investment controlling is the ongoing monitoring and steering of holdings by the investor through reports, metrics and early warning signals.

An investor meeting is an appointment between management and a potential investor in which both sides assess whether an investment is an option.

An investor update is the monthly or quarterly report from management to investors on key figures, liquidity, achievements and problems.

An IP assignment is the contractual allocation of intellectual property, such as software, inventions and trademarks, to the company that uses it.

An IPO is a stock market flotation: a company offers shares to the public for the first time and has them admitted to trading on an exchange.

The J-curve describes the return profile of an investment fund: negative at first because of fees and write-downs, rising later through sales.

A KPI (Key Performance Indicator) is a metric that shows whether a company achieves key objectives, such as ARR, churn rate or gross margin.

Lead generation is the systematic acquisition of prospects who fit the target customer profile and have shown demonstrable interest in the offering.

Leasing is the use of a vehicle, machine or property against ongoing instalments, with the lessor remaining the legal owner.

A legal opinion is a law firm's formal confirmation on legal points of a transaction, such as existence, representation and validity of contracts.

Liabilities are a company's debts: what it owes to suppliers, banks, employees and the tax office. The maturity structure is what matters most.

A liability cap is the maximum amount in a company acquisition up to which the seller is liable in total for the buyer's claims under warranties.

A liquidation preference secures investors a fixed amount on a sale or dissolution of the company before the other shareholders receive anything.

Liquidity is a company's ability to meet due payments on time at all times. It is measured with liquidity ratios and liquidity planning.

Liquidity planning is the ongoing forward calculation of all receipts and payments of the coming weeks and months to secure solvency.

Loan repayment is the return of the borrowed principal. Unlike interest, it reduces liabilities and liquidity but not profit.

The locked box mechanism fixes the purchase price on the basis of a balance sheet before signing. From its reference date, no value may flow to the seller.

The lock-in effect is customer retention through technical, contractual or data-related switching costs that make changing provider uneconomic.

An LOI (letter of intent) is a declaration of intent in which the parties record the key points of a planned transaction, mostly on a non-binding basis.

A longlist is the broad, unweighted list of all investors or buyers for a funding round or a sale; the shortlist is drawn from it.

The LTV/CAC ratio compares customer lifetime value with the cost of acquiring that customer. As a rule of thumb, a ratio of 3 to 1 or higher is considered sustainable.

LTV (Customer Lifetime Value) is the gross profit a customer generates over the whole relationship, based on revenue, gross margin and churn.

The magic number measures sales efficiency: net new annual recurring revenue per EUR 1 of the previous quarter's sales and marketing costs.

A majority vote is a resolution passed by simple majority; in a GmbH, more than half of the votes cast suffice, and abstentions do not count.

A management buy-in is the acquisition of a company by external executives who take over its management with the purchase.

A management buy-out is the acquisition of a company by its existing management, usually financed with bank loans and equity capital.

A management presentation is an in-depth presentation of a company by its leadership to selected buyers or investors during the review phase.

Management reporting is the regular internal reporting to management, advisory board and shareholders, with KPIs, budget comparison and commentary.

A market analysis examines a market's size, customer groups, competition, drivers and entry barriers to substantiate planning and growth targets.

A material adverse change (MAC) is a major deterioration of the target before closing that can release the buyer from the purchase.

The maturity date is the due date of a loan. For a convertible loan, the contract determines whether it is then repaid, converted or extended.

Media for equity is a form of investment in which a media company provides advertising and receives shares in the advertised company.

A merger combines two companies: one transfers all its assets and debts to the other and ceases to exist. Its shareholders receive shares in the surviving company.

Mezzanine capital is a hybrid of equity and debt, such as a subordinated loan, silent partnership or profit participation right. It ranks behind other creditors and pays a higher return.

MoM growth is the percentage change in a metric against the previous month, usually MRR: the current value divided by the prior value, minus 1.

Monthly closing brings a month's bookkeeping to a reconciled state and assigns income and costs to the month to which they belong.

MRR (monthly recurring revenue) is the recurring monthly revenue from ongoing customer contracts, excluding one-off income, and the basis of ARR.

An MVP (minimum viable product) is the smallest usable version of a product, used to test an assumption about customer needs with real customers.

An NDA is a confidentiality agreement that obliges the recipient to keep information received secret and to use it only for the transaction.

Net burn is the net outflow of liquid funds in a month, that is, payments out less payments in from the business, excluding financing inflows.

Net debt is the sum of financial debt less freely available cash; a negative value is called net cash.

Network effects exist when a product becomes more valuable to each user the more others use it, within one group or between providers and buyers.

A non-compete agreement is a ban on competing with a former company after an employment or managing director contract has ended.

A non-compete clause is the clause by which shareholders or sellers promise not to compete with the company; competition law sets the limits.

The non-participating liquidation preference gives the investor on a sale the higher of its preference amount and its share of proceeds, never both.

A non-solicitation clause is a contractual ban on poaching: a party may not deliberately solicit a company's employees or customers for a limited period.

The North Star Metric (NSM) is the single metric that captures the value customers get from a product and against which a company measures growth.

A no-shop clause bars sellers and the company from approaching or negotiating with other interested parties for a set period.

A notices clause sets the form, route and recipient for declarations under a contract and when they count as received.

The NPS (Net Promoter Score) measures customers' willingness to recommend a company as the share of promoters minus the share of detractors.

An observer seat is the right to attend meetings of an advisory or supervisory board without a vote and to receive the meeting documents.

OKR (Objectives and Key Results) is a goal-setting method that links a qualitative objective with measurable key results, usually for one quarter.

Open source means software whose source code is publicly available and may be used, modified and passed on under the terms of a licence.

Operating cash flow is the money the ongoing business generates or consumes in a period, excluding investments and financing.

Ordinary course of business is the seller's duty to keep running the target company as usual between signing and closing.

Organisational development is the planned change of structures, processes, leadership and collaboration in a company, with employees involved.

Outbound is the active approach to potential customers who have not made contact themselves; in Germany, Section 7 UWG sets narrow limits.

An overdraft facility is a credit line on the business account that can be used flexibly up to a limit; interest is charged only on the amount drawn.

A participation agreement governs how an investor receives new GmbH shares for payment: capital increase, additional payment, warranties and closing.

Payment delay (default) occurs when a debtor fails to pay a due monetary claim after a demand or agreed date and then owes default interest.

Payroll accounting is the systematic process of calculating, managing, and reporting employee compensation, taxes, and deductions to ensure legal compliance and financial accuracy in a business.

Pay-to-play is a rule under which investors keep their preferential rights only if they take at least their pro rata share in a follow-on round.

Personal income tax is the tax on the income of individuals, such as salary, dividends or gains on the sale of shares; its rate rises with income.

A pitch deck is a slide presentation in which a company presents its business model, market, metrics, team and capital requirement to investors.

A pivot is a change of direction by a company based on market insights, in which essential parts such as technology or team are retained.

A pooling agreement binds shareholders to vote uniformly and to pass on shares only within the group, mostly because of inheritance tax.

A post-closing purchase price adjustment is the procedure in which the provisional purchase price is fixed after closing on the basis of reference date figures.

Post-money valuation is the value of all shares in a company immediately after a funding round: the pre-money valuation plus the new capital.

Precedent transactions are completed acquisitions of comparable companies whose purchase prices are used to derive valuation multiples.

Pre-emptive rights are subscription rights: existing shareholders may take up new shares in a capital increase in proportion to their holding.

Preferred stock is the investor share class under US law with priority in sale proceeds; in a GmbH, shares with preferential rights correspond to it.

Pre-money valuation is the value of all shares before a funding round, that is, post-money valuation minus the investment. It determines the price per share.

Private equity is unlisted equity capital, in the narrow sense the partly debt-financed purchase of majority stakes by fixed-term funds.

Product-led growth (PLG) is a growth strategy in which customers try, buy and expand the product themselves, largely without personal sales.

Product-market fit is the state in which a product is used, paid for and sold by repeatable means in a customer segment on a lasting basis.

A proof of funds shows that an investor or buyer has the money for a deal, such as a bank confirmation or capital commitment.

Protective provisions are the investors' consent catalogue agreed in the term sheet: certain resolutions and transactions require their approval.

Provisions are set aside for obligations that are probable but still open in amount or timing. They are mandatory, not optional.

A qualified financing round is an equity round meeting contractual minimum conditions that triggers conversion of convertible loans.

An R&D project is a defined project of research or development with an open technical question. Its definition determines eligibility for funding.

Recapitalization restructures the capital structure, for example by capital cut, debt-to-equity swap or debt-financed distribution.

A red flag report is a due diligence report that names only material risks of the target company and ranks them by severity and need for action.

Registration rights are US rights of investors to have their shares registered for public resale. German law has no direct equivalent.

Reps & warranties insurance (RWI) is a warranty insurance in company acquisitions that covers the buyer's losses from unknown breaches of warranty.

The research allowance is a tax incentive for research and development. It is applied for at the tax office and offset against tax or paid out.

Retention bonuses are payments made to key people in a company sale for staying on for a set period, usually 12 to 24 months.

Retention rate measures what share of customers or revenue stays. Net revenue retention is the more telling figure because it includes expansion.

Return on equity is net income for the year as a percentage of equity. It shows how the shareholders' capital earns a return in the company.

Return on sales is profit as a percentage of revenue, calculated as earnings / revenue × 100. It shows how many cents of each euro of revenue remain as profit.

Revenue-based financing is repaid with a fixed share of ongoing revenue until an agreed multiple of the amount advanced is reached.

The revenue model defines what customers pay for, how often and on what basis, such as goods, subscriptions, licences, transactions or commissions.

The revenue multiple is enterprise value divided by revenue or annual recurring revenue, widely used for growth companies without profits.

A reverse break-up fee is a payment by the buyer to the seller side if the deal fails, for example because of its financing or a regulatory approval.

The reverse triangular merger is a US acquisition structure: a purpose-formed buyer subsidiary merges into the target, which survives as a subsidiary.

A roadshow is a dense series of investor meetings: during the offer period of an IPO, and as a bundled approach in private funding rounds.

ROAS (return on ad spend) measures revenue per euro of advertising, calculated as attributed revenue divided by ad spend. A ROAS of 4 equals 400%.

Roemer Capital OS (RCOS) is the client portal of Roemer Capital, in which clients follow their transaction process and the CFO services in one place.

A roll-up is the merger of many small companies into one group, or the pooling of many small investors in a joint company.

The Rule of 40 is a rule of thumb for software companies (SaaS): revenue growth and profit margin in percent should add up to at least 40.

Runway is the number of months for which a company's liquid funds last at the current monthly cash outflow without new capital.

A SAFE is a contract from the US market: an investor pays today and receives shares only in the next funding round, with no interest or term.

Sale and leaseback is the sale of a company's own asset to a lessor or investor, with a leaseback so that the company can continue to use it.

A sales funnel maps the path from first contact to closing in stages with conversion rates and shows where prospects are lost.

The sales pipeline is the stock of open sales opportunities on a reporting date, each with value, stage, probability and expected closing date.

Scalability is the ability of a business model to increase revenue sharply while costs and organisation grow only less than proportionately.

A Schuldschein loan is a loan to a company from several banks, insurers and funds, arranged by one bank, without a stock exchange or prospectus.

An SDK (software development kit) is a package of ready-made code components, guides and tools with which developers integrate a service.

A secondary sale is the sale of existing shares to investors; the proceeds go to the selling shareholders, not to the company.

A security token offering (STO) is the issue of digital tokens with security-like rights, such as interest or profit claims. It is subject to capital markets law.

Series A is a startup's first larger funding round with professional investors, usually venture capital funds, after demand has been proven.

Series B is the funding round after Series A, with which a startup expands a business model proven in the market on a larger scale.

Series C is a late funding round with which an established company finances expansion and acquisitions, often ahead of a sale or IPO.

The serviceable addressable market (SAM) is the part of the total market a company can serve with its current product, regions and channels.

The serviceable obtainable market (SOM) is the part of the SAM a company can win in a fixed period, calculated from its sales capacity.

A severability clause (German: salvatorische Klausel) preserves the rest of a contract if one provision is invalid and regulates its replacement.

A share deal is a company purchase in which the buyer takes over the shares; the company continues to exist with all its rights and obligations.

The shareholder structure describes who holds a stake in a company, in what amount, by what route and with what voting and special rights.

A shortlist is the assessed, prioritised selection from the longlist: the investors or buyers who are actually approached in the process.

A shotgun clause resolves a deadlock between shareholders: one names a price, and the other must buy or sell at that price.

Signing is the binding conclusion of the transaction contracts, before a notary for shares in a GmbH; transfer and payment follow only at closing.

An SLA is a contractual promise of measurable service quality, such as availability and response time, with consequences if it is missed.

SME status is the classification as a small or medium-sized enterprise under the EU definition. It determines access to funding and higher funding rates.

A sovereign wealth fund is a state-owned fund that invests public assets for the long term, including in late-stage financing rounds.

Specific performance is the claim to performance of a contract rather than damages; under German law this claim to performance is the normal case.

A spin-off is the separation of a business unit into its own company whose shares go to the existing shareholders.

State aid law is the part of EU law that limits state support for companies. It covers the prohibition, exceptions, ceilings and recovery.

A stock split increases the number of shares without new capital; in a GmbH, by dividing shares or a capital increase from reserves.

The strike price is the price per share at which an employee option is exercised or which is deducted from proceeds for virtual shares.

Subordinated liabilities are debts that are paid in insolvency only after all other creditors, by operation of law or through a subordination agreement.

The success fee is the part of an adviser's remuneration, set in the fee agreement, that is owed only if the financing or sale is completed.

A supermajority vote is a resolution passed by a qualified majority; in a GmbH, amendments to the articles require three quarters of the votes cast.

Synergies are gains in value that arise only from combining two companies, for example through lower costs or additional revenue.

A tag-along right is the right to join a co-shareholder's sale of shares and to sell alongside on the same terms.

A talent assessment is the structured evaluation of a person's skills, behaviour and potential against requirements set in advance.

A tax adviser power of attorney lets third parties obtain information and documents from the tax adviser and releases the adviser from confidentiality.

Taxation of options is the tax treatment of employee options and virtual shares, in Germany generally taxed as employment income on receipt.

TCV (total contract value) is the total value of a customer contract over its firmly agreed term, including one-off fees such as set-up.

A teaser is a short company profile for first approaching buyers or investors before a confidentiality agreement, usually anonymous in a sale.

Technical debt is the additional effort that arises later in software development because quick rather than sustainable solutions were chosen.

A tech stack is the combination of programming languages, databases, servers and purchased services on which a software product runs.

A term sheet summarises the terms of a financing round; usually only exclusivity, confidentiality and costs are binding.

A Texas shootout resolves a deadlock through sealed bids by both shareholders; the higher bidder buys the other's shares at its own bid.

A timesheet records who worked how much time on a funded project. Without it, funding is reduced or reclaimed.

Top-down market sizing derives market size from a published total through shares and serves as a cross-check on bottom-up sizing.

The total addressable market (TAM) is annual revenue at 100% market share: customers times annual value per customer. SAM and SOM follow below.

A trade sale is an exit through the sale of a company to a strategic buyer, usually from the same or an adjacent industry.

A Transition Services Agreement (TSA) is a contract under which the seller provides a sold business with temporary services such as IT or accounting.

A trial balance shows for each bookkeeping account the opening balance, the debit and credit totals and the closing balance at a reporting date.

Unit economics describe revenue and costs per unit, usually per customer, and show whether a customer repays the cost of acquiring them.

Usufruct is the right to use another person's asset or right and to draw its income, for example with gifted property or GmbH shares.

UX/UI covers the design of digital products: UX (user experience) is the overall experience of use, UI (user interface) the screen interface.

The valley of death is the funding gap between developing a product and the point at which revenue covers ongoing costs.

The valuation cap is the maximum valuation of a convertible loan or SAFE. It sets the highest price per share at which conversion takes place.

A valuation range is the band of values, derived from several methods and scenarios, within which the value of a company or its shares plausibly lies.

A vendor due diligence is a review of the company commissioned by the seller, whose reports prospective buyers receive in the sale process.

A vendor loan is part of the purchase price deferred by the seller with interest, usually ranking behind the buyer's bank financing.

Venture capital is equity from specialised funds for young, unlisted growth companies, invested as a temporary minority stake.

A venture client is an established company that uses a young company's product as a paying customer instead of taking a stake in it.

Venture debt is a loan to venture-backed companies without sufficient cash flow, usually with warrants over shares granted to the lender.

Vesting is the schedule under which founders and employees gradually earn their equity stake, usually over four years with a one-year cliff.

Veto rights allow a shareholder or group to block resolutions, based on statute, articles of association or a shareholders' agreement.

A viral loop is a growth cycle in which use of a product itself brings in new users, measured by the K-factor.

A voting agreement is a contract in which shareholders commit to vote in an agreed way at shareholder meetings, for example on board elections.

Voting rights are shareholders' rights to vote; in a GmbH each euro of nominal value carries one vote, regardless of the price paid.

A warranty is a promise in a company purchase or investment agreement that certain facts are true, with liability even without fault.

A waterfall analysis calculates how sale proceeds are distributed in stages to creditors, preferred investors, founders and employees.

Weighted average is an anti-dilution protection that partly lowers an investor's entry price in a cheaper later round, depending on round size.

Withholding tax is tax that the payer deducts directly from a payment and remits to the tax office, for example capital income tax on dividends.

Working capital is net current assets: current assets minus short-term liabilities, operationally inventories and receivables minus supplier payables.

A working capital adjustment changes the purchase price if the capital tied up in day-to-day business on the closing date deviates from an agreed normal level.

XBRL is a data format for submitting financial reports in machine-readable form; in Germany it is the format of the E-Bilanz sent to the tax office.

Xetra is the electronic trading venue of the Frankfurt Stock Exchange, operated by Deutsche Börse, for shares, ETFs and other securities.

YoY growth is growth against the same period of the previous year: current value divided by prior-year value, minus 1. Seasonal effects drop out.

A zebra is a company that pursues profitability and social benefit equally and prefers sustainable growth to fast growth.