Glossary


This glossary contains original definitions as well as definitions imported from various sources. To that effect, Anges Québec wishes to thank First Angel Network, GoTroo, National Angel Capital Organisation (NACO), Osler Hoskin & Harcourt and Réseau Capital for their contribution to the realization of this project.

Term Translation Definition
Statutory Voting Vote statutaire

Voting in accordance with a company’s articles of incorporation. Each share entitles its holder to one vote.

Due Diligence Vérification diligente

Set of research and information-checking measures that enable an investor to form a judgment on the operations, financial situation, performance results, development prospects and organization of the company before investing.

Valuation Valorisation

The process of determining the present value of an asset or company. Numerous methods can be used to peg this value; some are subjective, others are objective. Common approaches to valuating a company involve a review of its financial statements, discounted cash flow analysis and comparisons with similar firms.

Securities Valeurs mobilières

Instruments that are or are likely to be negotiable or listed. They may represent, as the case may be, a percentage of the share capital of an issuer (share), a portion of a long-term loan issued by a company or a public authority (bond), a right to subscribe to a security by an issuer (warrant), an option, a negotiable futures contract for a financial asset (share, bond, forward contract, etc.), an index or a commodity.

Time Value of Money Valeur temporelle de l’argent

Value that cash acquires with the passing of time, due to the possibility of investing it or lending it to third parties.

Pre-investment Value Valeur préinvestissement

Valuation of a company before investments made by one or more investors.

Post-investment Value Valeur post-investissement

Valuation of a company after investments made by one or more investors.

Net Asset Value (NAV) Valeur liquidative

Value of a company’s net assets that can be defined as being the value of the company’s assets minus the value of its liabilities.

Book Value Valeur Comptable ou Valeur aux livres

Value attributed to an element in the financial statements or accounts. Book value depends on the accounting model chosen, for example, whether historic value or current value is used as a basis. The accounting value of an asset is based on its initial cost minus amortization and depreciation costs attributable to it. The book value of a share is determined by dividing the total equity attributable to common shareholders by the number of common shares issued and outstanding.

Net Present Value Valeur actualisée nette

Surplus from the discounted value of the net cash flows arising from an investment on discounted negative cash flow that is required to make that investment.

Unit Unité

Each share issued by a company includes a subscription warrant that itself grants the right to subscribe to new shares in the company.

Senior Security Titre prioritaire ou Valeur de premier rang

Security granting its holder preferential rights on assets of the issuing company in relation to other security categories. In the event of liquidation, for instance, a secured debt-holder must be paid ahead of a non-secured debt-holder. Non-secured debt-holders must be paid ahead of preferred shareholders who, in turn, have the right to be paid ahead of common shareholders. Each security has priority over the next category.

Debt Instrument Titre de créance

Security noting the obligation by the issuing company to pay the security’s holder accrued interest (a coupon) and to reimburse the capital at a later date – the maturity date. Includes bonds, debentures and notes of all kinds.

Convertible Security Titre convertible

Security that gives its holder the right, typically at the holder’s discretion but sometimes at the company’s discretion, to exchange it in return for a predetermined number of other securities in the same issuing company, usually common shares, in compliance with pre-defined conditions.

Hurdle rate Taux épreuve

The lowest profitability percentage granted to investors in an investment fund before managers can share in the profits.

Minimum Acceptable Rate of Return (MARR) Taux de rendement minimal

Discount rate reflecting the lowest return that an investor requires (e.g., a company’s weighted average cost of capital) before agreeing to invest in the firm.

Internal rate of return (IRR) Taux de rendement interne (TRI)

Rate that measures the average annualized return of a capital investment from negative cash flow (outflows) and positive cash flow (inflows). It is used to measure and track the performance of capital investments.

Compound Annual Growth Rate (CAGR) Taux de croissance annuel composé

Growth rate over several fiscal years indicating the percentage change for each year in comparison to the preceding year rather than as a percentage change for the period as a whole.

Burn Rate Taux d’épuisement des fonds

Assessment of the pace at which a company consumes its available cash, either in terms of monthly expenses or as an estimate of the number of months before it becomes necessary to inject new capital to finance company operations.

Fund Size Taille du fonds

Total amount of capital available for investment purposes that is received from investors, equity funds or venture capital funds.

Capitalization table (Cap Table) Tableau de capitalisation

Table (chart) that sets out the allocation of capital in a company before and after a capital investment, reflecting any existing or prospective dilutive mechanisms.

Syndication or Co-investment Syndication ou Coinvestissement

Two or more capital investors in a transaction with the same terms and conditions. The average rate of co-investment corresponds to the total number of investments made divided by the total number of rounds during a fixed period.

Syndicate Syndicat financier

Underwriters, brokers or operators who buy or sell securities as a group. Also called a consortium.

Exit Strategy Stratégie de sortie

Method used by a fund to sell off its assets and maximize returns. The strategy choice depends on the business climate at the time of the exit, including market conditions and industry trends.

Later Stage  Stade avancé

Stage of a company’s development characterized by viable commercial products, a developed market, major customers, sustained revenues, profits and positive cash flow from operations. Investments in “Round C” or later are considered later-stage investments.

Underwriter Souscripteur

Generally a brokerage firm or a financial institution that, either alone or as part of a financial consortium, serves as intermediary in an investment transaction of securities to the public.

Exit Sortie

Occurs when investors in a start-up are able to sell their stake in it. The three most common types of exits are a buyout by a third party, an initial public offering (IPO) and a management buyout (MBO).

Public Company Société ouverte

A company with its shares officially listed on stock exchanges, trading over the counter or sold to the public in any way.

Partnership Société en nom collectif

A non-taxable corporation in which several individuals (associates) agree to pool their goods, credit or industry with the intention of sharing any subsequent profits.

Limited Partnerships Société en commandite

A corporation made up of one or more associates called general partners who are responsible for managing the corporation and for its debts, as well as of one or more other associates called limited partners, who bring financial support in cash or in kind and whose exposure to any debts is limited to that support. In a typical venture capital fund, the general partner receives management fees and a share of profits, while the limited partners receive income, capital gains and tax benefits.

Holding Company Société de portefeuille

Company with assets that consist largely of equity securities in other companies (subsidiaries) and that engages in financial transactions that affect the latter, while also managing its own affairs.

Closed-end Fund Société d’investissement à capital fixe

A collective investment undertaking that, unlike mutual funds or an open-ended investment company with variable capital, has a fixed number of outstanding shares or shares issued that their holders cannot buy back but that are marketable.

Shell Corporation Société coquille

Company that has no real asset, no debt and no commercial activity. Generally speaking, such companies are set up to acquire existing companies.

Break-even Point Seuil de rentabilité

Indicates the point at which revenues equal expenses. This helps a company determine the sales volume required to cover costs and expenses and to start making a profit.

Risk Risque

An adverse event that is fairly predictable and that can affect the completion of a program, a plan or a policy and hence result in a loss on an investment.

Return on Investment (ROI) Retour sur investissement

A performance yardstick used in evaluating the efficiency of an investment or to compare the efficiency of a certain number of various types of investment. In an early-stage investment, return on investment refers to the financial gain for an investor on the amount invested in a firm. To calculate the return on investment, divide the profit made by the cost of the investment.

Fully Diluted Earnings per Share Résultat dilué par action

Portion of earnings or losses in a given period attributable to every common share outstanding during that period and to every additional common share that would have been outstanding if all potentially dilutive common shares that were outstanding in the period had been converted to common shares.

Recapitalization Restructuration du capital

Changes in the makeup of a company’s share capital that alter the nature and number of various share categories and other equity elements but that do not alter the accounting value of asset items.

Tax-Free Reorganization Réorganisation exemptée d’impôts

Kinds of business combinations in which shareholders are not exposed to tax obligations.

Employee Share Ownership Plan or Employee Stock Option Plan (ESOP) Régime d’options d’achat d’actions ou Régime d’options de souscription d’actions des employés (ROSAE)

An incentive plan in which a company offers employees stock options. Serves as an incentive for employees to contribute to the firm’s long-term interests.

Option Pool Régime d’options d’achat d’actions 

An incentive plan in which a company offers senior executives stock options in the firm.

Write-Up / Write-Down Réévaluation / Dépréciation

Adjustment in the value of an asset upward or downward, for accounting and disclosure purposes. These adjustments are estimates and tend to be subjective but are generally based on events that affect the company or its securities in a positive or negative sense.

Turnaround Redressement d’entreprise

Financing a company that has experienced financial difficulties and that has pinpointed and implemented measures to return to profitability.

Conversion Rate Ratio de conversion

Number of shares or other securities that can be exchanged for convertible securities.

Write-Off Radiation

Reduction in the value of an asset or of revenues by the amount of an expense or a loss. Used to reduce or eliminate the value of an asset.

Buy-Out Rachat

Acquisition of a company or a controlling stake in it by equity investors, company executives of the acquired firm and/or a new team. The financial package can include a relatively high debt component (which is why it may be called a leveraged buyout), and reimbursement is based in part on using the target firm’s future cash flow. There are several scenarios:
• MBO (management buyout): buyout of a company by its management team (one or more executives, non-shareholders or minority stakeholders);
• MBI (management buy-in): buyout of a company with one or more outside buyers;
• BIMBO (buy-in management buyout): buyout of a company with one outside buyer in association with the seller and /or with the company’s senior executives.

Prospectus Prospectus

Document which any public company intending to issue securities in a public offering must submit to regulatory authorities. It also contains a takeover bid that the issuing firm must publish to comply with applicable laws and regulations.

Intellectual Property Propriété intellectuelle

Indicates intangible property rights. Even though ideas and concepts are, by default, in the public domain, some laws grant certain exclusive property rights. The best-known intellectual property rights (also known as IP) are patents, brand names, industrial designs and models and copyright laws.

Exercise Price Prix d’exercice

The set price in an options contract to acquire or dispose of an underlying security. Often, the strike price is defined as the fixed price at which an option-holder can buy (in a “call option”) or sell (in a “put option”), the underlying security.

RTO Prise de contrôle inversée

Strategy used by a privately held firm to gain access to public markets by taking over a publicly listed company.

Generally Accepted Accounting Principles (GAAP) Principes comptables généralement reconnus (PCGR)

Principles and accounting standards in effect in a specific jurisdiction. These are formally recognized by an accounting standards board or authoritative reference texts or are accepted due to a precedent or to consensus.

Bridge Financing Prêt relais

Capital, generally in the form of a loan, provided for the short term to a company prior to an initial public offering (IPO) or for its next major capital investment.

Initial Public Offering (IPO) Premier appel public à l’épargne (PAPE)

Sale or initial offer of shares of a private company on public markets. This exit mechanism is common for equity funds, notably venture capital funds.

Other Early Stage Post-démarrage

The company has developed a product but does not yet generate significant profits. Usually, for high-tech and high-science-content companies, technological risk is considerably reduced but commercial risk remains high. Biotech firms, for example, often conduct clinical studies at this stage. For firms in more traditional and low-tech sectors, this generally indicates the commercial and industrial development stage that precedes sustained profitability.

Cash Position Position de trésorerie

The cash available to a company at a given time.

Valuation Policy Politique d’évaluation

Methods or guidelines an equity fund uses to determine the value of the assets in its portfolio.

Succession Plan Plan de relève

Basis for the transfer of ownership in a company from one generation of managers to the next, often with investment capital.

Plan of Arrangement Plan d’arrangement

Proposal that a company makes to its creditors to explain how it will reimburse debts incurred leading up to the filing of proceedings to avert a company’s bankruptcy. If necessary, it also explains the manner in which it plans to restructure its operations and finances. As a general rule, such proposals offer to repay a percentage of the amounts due or to exchange debt for a stake in the company or a combination of both options. There is no legal restriction as to the structure or content of a proposal.

Business Plan Plan d’affaires

Summary of a company’s strategy, actions and means which an entrepreneur or executive intends to implement over a fixed period, consisting of the necessary and adequate activities required to reach the objectives of a business project.

Private Offering or Private Placement Placement privé

Distribution by an issuer of securities to a restrained number of subscribers, often institutional investors, sophisticated purchasers or managers of the issuer acting on their own behalf.

Unit Offering Placement d’unités

Private or public placement in a group containing more than one kind of security. It generally consists of a share and a subscription warrant but may also be two categories of shares, a note and a share, etc.

Holding Period Période de détention

Period during which a shareholder owns an asset or financial instrument (e.g., a share). The period begins on the date of purchase and ends on the day of its sale. This is used to calculate annual profitability or for some tax incentives.

Lock-up Period Période de blocage

Period during which some shareholders agree to waive their right to sell their stock in a company. Investment banks that underwrite a public offering usually insist on a lock-up period, which generally lasts 180 days for major shareholders (holding 1% or more of the stock) to ensure orderly trading. Shareholders subject to such lock-ups are often senior management and company directors, strategic partners or large investors. Typically, these stakeholders will have subscribed before the public offering at a sharply lower price and stand to reap large profits. If a stockholder attempts to sell blocked shares during the lock-up period, the transfer agent will disallow the sale.

Carried Interest Participation aux profits

The portion of profits earned by an investment fund that is paid out to the fund’s managers. Dealt out as bonuses, this remuneration is an economic incentive for the executives to post major capital gains and boost the fund’s performance.

Pari Passu Pari passu

Phrase meaning literally “on an equal footing” and most often translated as “hand in hand.” In business terms, it denotes two securities that are on an equal footing, meaning they bear the same value and rights.

Golden Parachute Parachute doré

Lucrative contract awarded to senior executives containing generous clauses, such as severance pay, a bonus or stock options should they lose their jobs following a buyout of the company they manage by another firm.

Put Option Option de vente

Option granting an individual or entity (the seller of the option) the right, but not the obligation, to sell to another individual or entity (the buyer of the option) an agreed-upon (over-the-counter options) or standardized (option traded in public markets) number of underlying assets at a predetermined price (the strike price) and on a fixed date (European option), or at any time prior to a predetermined maturity date (American option), in consideration of payment by the buyer to the seller for the price of the option, called the prime.

Stock Options Option d’achat d’actions

Right granted by a company to buy a given number of its shares or to subscribe to a number of shares of the firm yet to be issued at a predetermined price and within a specific time period.

Call Option Option d’achat

Option granting an individual or entity (the buyer of the option) the right, but not the obligation, to buy from another individual or entity (the seller of the option) an agreed-upon (over-the-counter options) or standardized (option traded in public markets) number of underlying assets at a predetermined price (the strike price) and on a fixed date (European option), or at any time prior to a predetermined maturity date (American option), in consideration of payment by the buyer to the seller for the price of the option, called the prime.

Option Option

An option contract traded over the counter or in a regulated market, giving its buyer the right, but not the obligation, to buy (a call option) or sell (a put option) a fixed quantity of an underlying security; for instance, a financial asset (share, bond, futures contract, etc.), an index or a commodity, at a predetermined strike price, either on a set date (European option) or at any time prior to a predetermined maturity date (American option).

Tender Offer Offre publique d’achat (OPA)

Process whereby an individual or entity wishing to acquire control of or expand a company publicly offers its shareholders a proposal to buy a set number of shares within a given period, usually at a higher price than their current market price, provided that, at the end of the specified period, the number of shares that the initiating buyer wishes to acquire is reached. The public tender offer can be conducted with the approval of the company in question (a friendly takeover), or without such approval (a hostile takeover).

Underwritten Offering Offre de prise ferme

Offering sold to a consortium of investment banks that is put together by one or more lead consortium banks.

Convertible Note/Debenture Obligation convertible

A bond likely to be converted at the discretion of its holder into other securities in the same company (typically common shares) in a given period, if the conditions set at the time of issuance are met.

Bond Obligation

A specific debt security most commonly issued by governments.

New Issue Nouvelle émission

Shares or bonds issued for the first time. It can consist of an initial public offering by a company that was previously privately held or of a new stock issue by a company that has already conducted an IPO.

Offering Memorandum Notice d’offre ou Notice d’offre de placement privé

Document drafted for a securities placement and for which the issuer takes advantage of a prospectus exemption (e.g., for a private placement). The issuer submits the offer to tender for the appropriate securities regulator’s approval and conveys it to individuals or entities affected by the placement before accepting any commitment on their part. This notice includes all relevant legal documents.

International Financial Reporting Standards or « IFRS » Normes internationales d’information financière ou « NIIF »

Accounting standards drawn up by the International Accounting Standards Board (IASB) for listed companies and investors in order to harmonize the presentation and clarity of their financial statements.

NewCo NewCo

Boilerplate name given to a new company yet to be created for the purpose of a financial package structuring or for a corporate or tax reorganization.

Over-the-Counter (OTC) Négocié hors cote

Securities or goods not officially listed on a stock exchange that are traded through a brokerage firm.

Mezzanine Mezzanine

Financing that completes the senior debt to which it is subordinated. It is better compensated than senior debt and provides an option in certain cases to gain access to a firm’s ownership.

Golden Handcuffs Menottes dorées

Financial incentives to discourage a company employee from leaving. This can be in the form of stock options that can be acquired only in a predetermined number of years, or contractual obligations requiring the employee to return any bonus or other compensation to the company in case of his/her departure.

Exit mechanism Mécanisme de sortie

A strategic tool used by a private equity fund to liquidate its holdings in a company and obtain optimal returns. There are several exit mechanisms, notably a company sale or buyout, a company buying out an investor’s stake or a sale on the open market in an initial public offering (IPO) or following such an offering.

Liquidation Liquidation

a) The process of converting securities into cash; or
b) The sale of assets in a company in order to reimburse its debts. In a liquidation, the claims of creditors, bondholders and owners of preferred shares take precedence over those of common shareholders.

Fund raising Levée de fonds

Fund raising is a call for investors to provide money required to develop any type of activity, whether economic, political or associational.

Deficiency Letter Lettre d’observations

Letter in which securities authorities make comments, ask questions deemed necessary and recommend some amendments after an examination of a preliminary prospectus, draft prospectus or annual information form filed by the issuer of a public offering.

Term Sheet Lettre d’intention

Document that lists the main terms and conditions on the basis of which an investor plans to invest in a company, including prerequisites, among other things.

Fair Market Value or “FMV” Juste Valeur Marchande ou « JVM »

The highest price, in dollars, that a property would fetch in a free unrestricted market between two consenting individuals who are knowledgeable, well informed and prudent and who exercise independent judgment.

Milestone Jalon de performance

An important event in the life of a project or a company, normally when a key goal is reached that can be measured either in financial terms or in deliverables. A milestone is a monitoring tool that serves to measure the progress of a project or a company and to confirm the progress and reassess the work or the task to be accomplished. It can be used to boost the pre-investment evaluation of an investment and/or to confirm a payment in a financing round.

Accredited Investor Investisseur qualifié

According to Section 1.1. of Regulation 45-106 Respecting Prospectus and Registration Exemptions, issued by the Autorité des Marchés Financiers:
– An individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1 million;
– An individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
– An individual who, either alone or with a spouse, has net assets of at least $5 million;
– A person in respect of whom all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons who are accredited investors; or,
– An owner, other than an individual or investment fund, that has net assets of at least $5 million as shown on its most recently prepared financial statements.

Non-accredited Investor Investisseur non-qualifié

Investor who is not considered an accredited investor as defined by the Securities Act and Regulation 45-106 Respecting Prospectus and Registration Exemptions. See “Accredited investor.”

Institutional Investor Investisseur institutionnel

Financial institutions (e.g., insurance companies, pension funds, investment companies with variable share capital, mutual funds) that invest large amounts in publicly listed firms.

Venture Capital Financing Investissement de capital de risque

Investment in a start-up company considered to have excellent growth prospects but that has yet to post a profit. The kind of investment desired by companies in the early stages of development that are looking for fast growth.

Finder Intermédiaire

Person who brings together parties interested in making a deal. Anges Québec is not considered an intermediary.

Accrued Interest Intérêts encourus

Interest due on debt or a surety bond since the last interest payment was made.

Registration Inscription

Approval that must be obtained from the Autorité des Marchés Financiers to act as a broker or investment adviser either on his/her own behalf or for an employer.

Capital Gains Gain en capital

The difference between the purchase price of an asset and its sale price when the sale price is higher. Long-term capital gains (on assets held longer than one year) are taxed at a lower rate than ordinary income. Every individual has a maximum exemption (50% rate) for investments that meet the specifications set out by tax authorities.

Merger Fusion

Transaction in which two or more companies decide to pool their assets and liabilities, creating one entity. Can be done either by one company absorbing another or by the creation of a new corporation. The ultimate goal is to achieve economic efficiency by eliminating duplication (factories, equipment, employees) and to allocate capital to boost the merged company’s sales and earnings.

Management Fee Frais de gestion

Fee or honorarium required for services rendered in fund management that is paid to the general partner or investment adviser, usually including management fees.

Secondary funds Fonds secondaires

Funds that specialize in the redemption of units in existing equity funds from investors who wish to disengage before the fund comes to term.

Fund of funds Fonds de fonds

A collective investment fund that invest mainly in shares or units of other collective investment funds.

Venture Capital Fund Fonds de capital de risque

Investment fund whose principal activity is to invest in companies. Generally, such funds give themselves precise investment targets in terms of business sectors and/or development stage of the firms to be financed.

Retail Fund Fonds de capital de développement ou Fonds fiscalisés

Fund that raises cash from individual investors, who benefit from tax incentives. There are three in Quebec: the Fonds de solidarité des travailleurs du Québec (FTQ), Fondaction CSN and Capital régional et coopératif Desjardins.

Private Equity Fund Fonds de capital d’investissement

A mutual fund or investment firm comprised of investors interested in making direct investments in privately held businesses or in takeovers of publicly traded companies. This kind of fund is generally set up as a limited partnership managed by a team of specialists. A capital investment fund typically lasts at least 10 years, during which it will invest in numerous projects concurrently.

Angel Fund Fonds d’anges investisseurs

Fund comprised of angels and/or institutional investors for the purpose of investing in start-up firms.

Free Cash Flow Flux de trésorerie disponible

Amount equal to the operating cash flow for a period minus the fixed-asset expenses incurred in the same period and equivalent to the liquid assets remaining at the end of that period once all necessary expenses have been met, including investments, and which are for the benefit of lenders (creditors and shareholders) of the company.

Deal Flow Flux de transactions

Indicates the speed at which new proposals are devised for financing firms. This expression is also used to denote the frequency with which the firms receive new proposals.

Royalties based Crowdfunding Financement participatif par royautés

Backers are rewarded with a percentage of sales.

Reward based Crowdfunding Financement participatif par récompenses

A funding model based on public participation in which entrepreneurs ask for cash to sustain their company in return for rewards and benefits. The rewards can range from a simple thank-you card to a production version of the merchandise being financed. In most cases, the reward is the product or service that an entrepreneur is attempting to create.

Equity Crowdfunding Financement participatif par équité

A funding model based on public participation in which the entrepreneurs ask the general public for cash to sustain their company in return for a stake in the firm’s capital.

Debt Crowdfunding Financement participatif par dette

A funding model based on public participation in which an entrepreneur or an individual borrows an amount in exchange for a commitment of repayment according to a predetermined schedule and an agreed-upon interest rate. This type of financing is not currently available to the North American general public.

Angel Financing Financement des anges

Capital raised by a private firm from independent wealthy investors. Generally used as start-up capital.

Seed Financing Financement de prédémarrage

Financing at the inception stage of a company, typically consisting of a founding management team, the development of a business plan and of a prototype.

Bankruptcy Faillite

State of a company which has made divestitures or which is the object of a bankruptcy order or insolvency order.

Liquidity Event Événement de liquidité

Any event enabling private investors to sell or monetize their investment such as a merger with a publicly listed company, the sale of the company or a public offering.

Pre-Money Valuation Évaluation préinvestissement

Valuation of a company before a financing round. This subjective value is tallied using various calculation models and by drawing comparisons.

Post-Money Valuation Évaluation post-investissement

Financial valuation of a firm immediately following the latest financing round. This value is arrived at by multiplying the total number of company shares by the price of the shares sold in the previous round.

Statement of revenue and expense État des revenus et dépenses ou État des résultats

A financial statement that summarizes revenues posted and the charges and expenses incurred in a specific time frame, usually a month, a quarter or a fiscal year.

Spin-off Essaimage

Creation of a new business with assets and people coming from an existing company.

Management Team Équipe de direction

Main persons managing the company’s activities (general managers and vice-presidents).

Covenant Engagement

An agreement requiring anyone bound by contract to do or not to do something: more specifically, a clause in a loan contract designed to protect the creditor and which, on the part of the borrower, represents a commitment to do or not to do something and with non-compliance resulting in forfeiture of the agreed terms.

Key employees Employés clé

Professional management brought in by the founder to run the company. Key employees are typically retained with warrants and ownership stakes in the company.

Rights Offering Émission de droits

The issuance of subscription rights of shares with the purpose of giving shareholders the opportunity to underwrite a new issue pro-rated to the shares they own.

Private Issuer Émetteur fermé

A company that is not subject to the prospectus obligations stipulated in the Securities Act and that satisfies the following requirements:
a) It is not a reporting issuer;
b) Its securities, with the exception of non-convertible debt, are subject to restrictions on their transfer, and beneficial ownership is limited by 50 individuals at most, with the exception of employees of the company or of companies in the same group;
c) Its securities are invested solely by individuals “close to” the company, that is, people who are presumed not to need the protection afforded by a prospectus (e.g., directors, managers, employees, members of directors’ families, senior executives, founders or participants in the issuer’s controlling stake); see Section 2.4 of Regulation 45-106 Respecting Prospectus and Registration Exemptions.

Reporting Issuer Émetteur assujetti

A company that has made a public offering and is subject to reporting requirements as defined by the Securities Act.

Issuer Émetteur

A company that is issuing, proposes to issue or has issued securities.

Cumulative Voting Rights Droits de vote cumulatifs

Voting procedure used to elect board of directors, with each share giving its holder as many voting rights as there are directors to be elected.

Voting Right Droit de vote

Right that a shareholder can exercise during the company’s annual shareholders meeting. Each common share generally provides one vote.

Tag-Along Right Droit de suite

Indicates a contractual obligation stipulating that, if majority shareholders sell their stake in a business, minority shareholders have the right to sell their shares on the same terms and conditions as the majority shareholders. By investing in the early stages, angel investors and venture capitalists consider this resale right as a basic protection, without which they would not invest.

Right of First Refusal Droit de premier refus

The right in a shareholders’ agreement conferred on one shareholder to supplant a possible future acquirer by offering to buy shares from a selling shareholder on the same conditions as the outside suitor.

Preemptive Right Droit de préemption

Right bestowed on shareholders to be the first to subscribe on a pro-rata basis to a new stock issue.

Drag-Along Right Droit d’entraînement

A type of contractual obligation that allows majority shareholders to force minority shareholders to join a company’s sale on the same conditions as them, including the same valuation. Hence the majority “drags along” the minority toward the exit. The drag-along right is a non-negotiable demand for angel investors and risk capital funds when they invest in start-ups.

Preferred Dividend Dividende privilégié

Dividend usually paid with precedence to preferred shareholders, ahead of payment to common shareholders.

Cumulative Dividend Dividende cumulatif

Dividend calculated at a fixed annual rate, outlined in the subscription agreement, that a company must remit to preferred shareholders who, in case of non-payment, obtain the right to be paid for all dividends owing and which takes precedence over all future dividend payments to common shareholders.

Dividend Dividende

Part of the profits a company distributes to its shareholders in proportion to the shares they own and respecting the rights inherent to each category of stock. For preferred stock, it usually entails a set amount. For common shares, the dividend varies in accordance with the company’s performance and may be omitted in case of a poor performance or if the board decides to retain the earnings to reinvest in the company.

Diversification Diversification

Investment strategy aimed at limiting the risks incurred by spreading invested capital among diverse firms in various sectors.

Dilution Dilution

The effect on existing shareholders’ stock when they cannot buy shares in a new issue on a pro-rata basis, meaning a reduction in the percentage of their holding in relation to the total number of outstanding shares.

Expansion or Growth Développement ou Croissance

At the development or growth stage, a firm typically has a viable product, a developed market, major customers and sustained revenue growth, and it has reached a break-even point and generates not only profits but positive cash flow as well. Financing is often aimed at boosting production capacity and the sales force as well as developing new products, services or markets and financing acquisitions and/or increasing the company’s working capital.

Subordinated Debt Dette subordonnée

Debt with reimbursement coming only after senior debt in the event of liquidation. The main feature is the absence of any specific guarantee. Also called junior or mezzanine debt.

Senior Debt Dette senior

In the financing structure, this indicates the contribution in depreciable secured debt granted by financial institutions, with reimbursement guaranteed by the sale of company assets to their benefit. Annual interest and capital repayment costs must be made ahead of junior debt, also called subordinate or mezzanine debt.

Convertible Debt Dette convertible

A financing vehicle that allows a start-up to raise money while delaying assessment discussions until the company is more mature. Although technically debt, the convertibles notes are intended to be converted into shares at a later date. Investors who accept convertible notes usually get a discount of 20% to 50% when converting them to shares because they invested at the initial stage, when risks were highest.

Long Term Debt Dette à long terme

Long-term loans and financial obligations (more than one year).

Short Term Debt Dette à court terme

Loans and financial obligations with a maturity of one year or less.

Debt Dette

Any obligation of one individual to pay an amount to another individual. It can be a primary, or direct, obligation such a debenture, or a secondary, or eventual, obligation such as a security.

Depreciation Dépréciation

Expense recorded to reduce gradually the value of a tangible asset over the long term. As this expense is not in cash, it increases the available cash flow.

Oversubscription Dépassement de souscription

Share issue or offer in which demand exceeds supply.

Start-up Démarrage

For high-tech firms in the start-up stage, financing is generally devoted to developing or marketing a product. In more traditional industries or those of medium or low technology, financing is aimed at launching commercial and/or industrial activity.

Disbursement Débours

Actual amount flowing from one or several equity funds to the company.

Debenture Débenture

Debt instrument similar to a bond but which is not secured by a security interest from the issuing company.

Growth or Expansion Croissance ou Développement

At the development or growth stage, a firm typically has a viable product, a developed market, major customers and sustained revenue growth, and it has reached a break-even point and generates not only profits but positive cash flow as well. Financing is often aimed at boosting production capacity and the sales force as well as developing new products, services or markets and financing acquisitions and/or increasing the company’s working capital.

Bridge Financing Crédit-relais

An interim loan, generally short term, approved by a credit issuer or by shareholders, that meets the borrower’s immediate cash requirements while awaiting an imminent flow of investment funds, definitive financing or completion of a particular transaction.

Net Financing Cost Coût net de financement

Difference between the cost of owning an asset (financing cost, storage, insurance, handling, etc.) and the interest or other benefit this asset generates within a defined ownership period.

Shareholders’ Agreement Convention entre actionnaires

Agreement reached among some or all shareholders of a company (founders, existing stockholders and capital investors) that seeks to define the capital ownership and the shifts in its apportionment, as well as the exercise of power. The most common provisions concern the rights protecting the minority shareholder(s), such as the right of first refusal, certain veto rights regarding key decisions, and exit mechanisms.

Subscription Agreement Convention de souscription

An agreement whereby an investor commits to buy securities (usually shares) of a company in return for payment of a subscription price and in which the company in question undertakes to issue securities at this issuance price. The subscription agreement usually includes legal representations and collateral securitization by the company on its capital stock, assets, operations, etc.

Control Contrôle

Control of an entity means ownership by an individual or corporation of securities carrying more than 50% of the voting rights, enabling this owner to elect the majority of the directors of said entity.

Partnership Agreement Contrat de société

A contract agreed to between associates when setting up a partnership (such as a limited partnership), specifying, among other things, the partners’ cash outlay, their respective roles, profit-sharing terms and the procedures to follow in case of dissolution or liquidation.

Staggered Board Conseil d’administration renouvelable par tranches

Board of directors in which only some of the members are elected each year rather than all of the members. This staggering of directors’ mandates is occasionally used as an anti-takeover mechanism at companies that are potential acquisition targets. The eventual buyers are forced to wait longer than would be required by the normal procedure of seizing control of the board by an election. Typically, the period lasts two to three years.

Confirmation Confirmation

Approval by a bank of the obligations stemming from a letter of credit.

General Partner (GP) Commandité

In a limited partnership, an associate who is involved in that company’s management and administration. It is the general partner’s responsibility to act in the interest of the limited partners, and he/she is wholly accountable for his/her actions. He/she is also severally liable for the partnership’s debts.

Limited Partner (LP) Commanditaire

In a limited partnership, an investor whose liability for the debts incurred by the company is limited to his/her input and who is not normally involved in the company’s management.

Advisory Board Comité aviseur

Group of outside advisers of an investment fund or holding company. The advice may cover overall strategy or any other matter. Unlike the board of directors, this committee normally has no decision-making powers.

Co-investment or Syndication Coinvestissement ou Syndication

Two or more capital investors in a transaction on the same terms and conditions. The average rate of co-investment corresponds to the number of investments made divided by the number of investment rounds during a set period.

Closing Clôture

Investment event that occurs after the required legal documents are signed by the investor and the company in which he/she invests, and after the funds are exchanged for capital stock or a debt instrument of the said company.

No Shop or No Solicitation Clause Clause de non-sollicitation

Exclusivity provision requiring a company to negotiate solely with a specific investor and not to solicit offers from other investors for a set period of time following the signing of a term sheet. Defining the duration of the exclusivity period is key. Typically, failure to comply with this provision triggers a penalty.

Weighted Average Anti-Dilution Provision Clause anti-dilution du type Weighted Average

Provision that protects a shareholder from dilution of his/her shares by an adjustment in the conversion price. The conversion price is reduced so as to increase the number of shares that can be received in a conversion of convertible shares, reflecting 1) a new issue price below that of shares purchased by the investor, and 2) the number of shares (or securities) issued at the time of the dilutive financing.

Full Ratchet Anti-Dilution Provision Clause anti-dilution du type Full Ratchet

Provision that protects a shareholder from dilution of his/her shares by an adjustment in the conversion price. The conversion price is reduced so as to increase the number of shares that can be received in a conversion at a price equal to that of the newly issued shares. For instance, an investor who paid $2 for his/her shares will receive more shares if the company, in a future financing round, issues stock at a lower price – say, $1 each. In that scenario, the shareholder can convert his stock at $1, and in so doing doubles the number of shares held and avoids the dilution of his/her stake in the firm.

Anti-Dilution Provision Clause anti-dilution

Clause prohibiting the company from issuing new shares without first giving the current shareholders the right to buy those new shares. (This provision can be of two kinds: 1) “full ratchet” anti-dilution, or 2) “weighted average” anti-dilution.)

Lead Investor Chef investisseur

Member of an investment consortium who is most involved in the financing aspect and who generally wants to be the biggest investor in a financing round.

Secondary Sale Cession secondaire

Sale by an investor of private or restricted securities of a holding company to other investors.

Capitalize Capitaliser

Recording a cost or an expense in an asset account rather than a profit and loss account.

Market Capitalization Capitalisation boursière

Value of a company based on the worth of its shares on stock markets, calculated by multiplying the number of common shares issued (constituting the capital stock) by their market price.

Capital (or Assets) Under Management Capital sous gestion

Capital that a general partner and/or a fund management team hold for investment purposes, including amounts already invested and those yet to be invested.

Committed Capital Capital engagé 

Portion of capital that has not yet been paid out that a private investor, an investment fund or a sponsor agreed to pay, in several instalments, often tied to benchmarks being reached.

Venture Capital Capital de risque

Capital invested in a company in its initial phases, generally before it has become profitable. This investment is usually high-risk or very high-risk.

Pricing Capital Adjustment Capital de redressement

Capital invested in a company that has had financial difficulties and for which measures to return to profitability are identified and put into effect.

Seed Money Capital d’amorçage

Funds necessary to launch a firm or a project, usually provided by angel investors and some risk capital investors.

Warrant Bon de souscription d’actions

Security conferring on the holder of a bond or share to which he/she is initially connected the right to subscribe to a set number of shares not yet issued by the company on conditions, deadlines and a price determined at the time of issuance of this bond or share.

Promissory Note Billet à ordre

Commercial instrument whereby a person (the subscriber) undertakes to pay, on a specified date, an amount to a designated beneficiary or to his/her nominee (promissory note) or to the holder of the note (the bearer). The note can be due at the fixed maturity date or upon request, with the beneficiary able to claim his/her due at any time.

Balance Sheet Bilan

Statement that shows a company’s financial and assets situation at a given time, listing assets and liabilities as well as the difference representing the amount of equity.

Earnings before Interest, Taxes, Depreciation, and Amortization «EBITDA» Bénéfices avant intérêts, impôts et amortissements ou «BAIIA»

Measures cash flow with the following formula: revenues minus expenses (excluding taxes, interest, depreciation and amortization). EBITDA provides a glimpse into the amount of cash a company generates or loses (also called “cash flow”).

Net income Bénéfice net

Surplus from the total proceeds and gains from one period after total charges (including taxes) and losses in that period.

Elevator Pitch Argumentaire éclair

Very concise presentation by a businessperson to potential investors covering the idea, business model, business solution, marketing strategy and the competition. Should not last more than 10 minutes.

Love Money Argent de la famille et/ou amis

Capital that comes from family members, friends or persons close to the founders of a company, usually invested during the start-up or pre-start-up stage. The choice to invest is based more on closeness to the entrepreneur than on the business plan.

Angel Investor Ange investisseur

Individual who invests personal funds in a private company majority-owned by others and who is not a family member. This person may be involved in the company’s management without being an employee. The angel must be an “accredited investor” as defined by Regulation 45-106 Respecting Prospectus and Registration Exemptions issued by the Autorité des Marchés Financiers.

Lead Angel Ange en chef

Member of a group of angel investors who is most actively involved in financing a firm and who is the contact person between members of the angel group and the company. The individual also usually finalizes the negotiations with the entrepreneur concerning the terms and conditions of funding by the group of angels.

Amortization Amortissement

Accounting procedure that serves to decrease gradually the book value of an asset. This is an expense that requires no cash outlay.

Seed Amorçage ou Prédémarrage

First stage in the creation of a company. In the innovation chain, this phase generally follows the issuance of a patent and/or the concept validation stage. Financing is allocated to research, evaluate and develop an initial concept. At this point, the firm has neither a product nor customers.

Price adjustment Ajustements de prix

All mechanisms that, within a set time frame, allow the adjustment of an “initial” subscription or purchase price of shares by a capital investor in accordance with events that occur after the said shareholder’s investment in the firm’s equity.

Director Administrateur

Person elected by shareholders to sit on the board of directors. The directors choose the senior executives (president, vice-president, etc.) and elect the chair of the board according to their wishes. The directors are appointed at the general meeting of shareholders by the total voting shares or by various categories.

Redeemable Preferred Shares by the Holder Actions privilégiées rachetables au gré du détenteur

Shares that the holder may require the company to redeem at a price, time and conditions stipulated at the time of issuance.

Redeemable Preferred Shares by the Issuer Actions privilégiées rachetables au gré de l’émetteur

Shares that the issuing corporation can buy back at a price and time it stipulates at the time of issuance.

Convertible Preferred Shares Actions privilégiées convertibles

Shares that the holder may, at his or her discretion, trade against a determined number of other securities of the same company (usually common shares) in accordance with the conditions stipulated in the company statutes. The conversion may also be automatic and occur at the time of predetermined events.

Cumulative Preferred Shares Actions privilégiées à dividende cumulatif 

Preferred shares with a right to cumulative dividends.

Preferred Shares Actions privilégiées

Category of shares that generally have precedence over common shares for dividend payments and/or in case of liquidation of assets.

Participating Shares Actions participantes

Shares in the capital stock of a company that, at any time, confer on their owners the right 1) to receive a portion of the remaining assets of a corporation in the event of a compulsory or voluntary dissolution or liquidation, and 2) to share in the profits or surplus assets of the corporation.

Common Shares Actions ordinaires

Stock that carries voting rights as well as the right to receive dividends and a portion of the remaining assets of a corporation in the event of liquidation.

Fully Diluted Outstanding Shares  Actions en circulation sur une base pleinement diluée

Number of shares in circulation, including shares to be distributed in a new share issue or following the exercise of options or other conversion rights.

Outstanding Shares Actions en circulation

Stock issued to shareholders and excluding treasury stock.

Issued Shares Actions émises

Stock issued to shareholders by the company in return for cash or in kind.

Treasury Stock Actions de trésorerie

Shares available for issuance when an equity financing is required. Treasury shares do not receive dividends and carry no voting rights.

Penny Stocks Actions cotées en cents

Shares that normally trade below $1 each and are generally considered of a highly speculative nature.

Corporate Charter Acte constitutif

The articles of incorporation of a company at the time of incorporation or of any update, as well as the articles of amendment, amalgamation, continuance, reorganization, revival or dissolution, and agreement rights.

Leveraged Buyout (LBO) Acquisition par emprunt

When a purchaser takes a controlling stake in a company through loans obtained using the borrowing capacity of the company being acquired. Generally, the assets of the latter are used as collateral on the loans obtained by the buyer, and the loans are subsequently repaid against the liquid assets of the acquired firm.