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The essentials of valuation explained without jargon, and the record of everything that evolves on the platform.

Valuation concepts

The five questions we hear most, answered with the depth they deserve.

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Glossary

The vocabulary of valuation, investment and M&A, in plain language. Use the letters to navigate.

A

Accelerator: An organization that speeds up a startup's growth through mentoring, connections, physical space and tools, usually taking a minority stake in return.
Acquisition: The purchase of control of, or of an entire, company. In marketing, it also refers to the first stage of the funnel, attracting and converting visitors into leads.
Advisor: A professional or advisory firm hired to run negotiations and M&A transactions.
Angel investor: An individual who invests their own money in early-stage companies, often contributing experience and a network as well.
Angel round: A round in which a startup raises money from angel investors, normally at an early stage.
ARR: Annual Recurring Revenue. Contracted annual recurring revenue, net of cancellations, discounts and non-recurring items. Not to be confused with total revenue.
Assets: The company's property, rights, investments and equipment, used in determining its value.

B

B2B and B2C: B2B is business to business, selling from company to company. B2C is business to consumer, selling to the end customer.
Backing: Support given to a startup: financial, through mentoring or by sharing experience.
BANT: Budget, Authority, Need and Time. A methodology for qualifying sales opportunities by budget, decision authority, need and timeline.
BDM: Business Development Manager. A professional focused on growth, identifying and developing new opportunities across sales, marketing and product.
Beta (β): A measure of how sensitive an asset's return is to the market. Used in the CAPM to estimate the cost of equity.
Break-even: The point of equilibrium: the revenue level at which the result is zero, with neither profit nor loss.

C

CAC: Customer Acquisition Cost. Total marketing and sales cost divided by the number of new customers won in the period.
CAGR: Compound Annual Growth Rate. The compounded annual rate of growth between two periods, which smooths out one-off swings.
Cap table: The detailed ownership table. In its fully diluted version, it includes options, convertible notes, SAFEs and warrants as if already converted.
CAPEX: Capital Expenditure. Investment in long-term assets (machinery, facilities, technology), whether for maintenance or expansion.
CAPM: Capital Asset Pricing Model. A model that estimates the cost of equity from the risk-free rate, beta and the market risk premium.
Capital contribution: Investment received to drive the business, research, expansion or equipment purchases; the investor generally receives an ownership stake.
Churn: The cancellation rate. Logo churn measures the loss of customers; revenue churn, the loss of revenue.
COGS / COS: Cost of Goods Sold and Cost of Services. Costs directly attributable to what was sold in the period.
Comparable multiples analysis: Compares the value of an asset or company with similar ones in the industry, using metrics such as P/E and P/B.
Control premium: The extra amount paid to obtain decision-making power over the company, above the proportional value of the stake.
Covenant: A debt contract clause that imposes obligations on the borrower, such as maintaining a minimum financial ratio.
CPC 46: The Brazilian accounting pronouncement on Fair Value Measurement, covering valuation techniques and the hierarchy of inputs. Equivalent to IFRS 13.

D

Data room: An organized repository holding all the company documentation made available for analysis in a valuation, fundraising or M&A process.
DCF: Discounted Cash Flow. A method that brings future cash flows to present value using a discount rate.
Debt-like: An item that, although not classified as financial debt, is equivalent in nature and must be deducted when calculating Equity Value — such as tax installment plans and material provisions.
Drag along: A clause that lets the majority shareholder require minority holders to sell their stakes on the same terms.
Due diligence: The process of detailed verification of accounting, tax, legal, labor and operating matters before closing a transaction.

E

EBIT: Earnings before interest and taxes. Also called operating income.
EBITDA: Earnings before interest, taxes, depreciation and amortization. A proxy for operating cash generation.
Enterprise Value (EV): The value of the firm: the worth of the operations before considering net debt. It compensates both lenders and shareholders.
Equity Value: The value attributable to the shareholders, obtained from Enterprise Value minus net debt and debt-like items, plus non-operating assets.
ERP (equity risk premium): Equity Risk Premium. The additional return demanded for investing in equities rather than in a risk-free asset.
EV/EBITDA: The multiple relating enterprise value to EBITDA. The most used in transactions involving mature, profitable companies.

F

Fair value: The price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. See CPC 46 / IFRS 13.
Family office: A structure that manages the wealth of one or more families, including direct investments in companies.
FCFF: Free Cash Flow to the Firm. The firm's free cash flow, available to lenders and shareholders. Discounted at the WACC.
Fully diluted: An ownership base that treats every convertible instrument as if it had already been converted into equity.

G

GMV: Gross Merchandise Value. The gross volume transacted on a platform. It is not revenue: revenue is the share the platform retains.
Goodwill: The difference between the price paid for a company and the fair value of its identifiable net assets.
Gordon (perpetual growth): The model used to calculate terminal value in a DCF, assuming constant, sustainable growth from the last projected year onward.

H

Holding: A company whose main activity is holding stakes in other companies. Frequently appraised through the asset-based approach.
Hurdle rate: The minimum return an investor requires to consider an opportunity viable.

I

Illiquidity discount: A reduction applied to the value of a private company to reflect how hard it is to sell the stake quickly.
Income statement: The report presenting revenues, costs, expenses and the result of a period.
Intangible: An asset without physical substance (brand, technology, customer base, license) that is only recognized separately when identifiable and measurable.
IVS: International Valuation Standards. The international appraisal standards published by the IVSC, the global reference for methodology and documentation.

J

Joint venture: An association between companies to pursue a specific business, sharing investment, control and results.

K

Kd: Cost of debt. The company's marginal borrowing rate, considered after the tax benefit of interest in the WACC calculation.
Ke: Cost of equity. The return required by shareholders, normally estimated through the CAPM.
KPI: Key Performance Indicator. A financial or operating indicator tracked on a recurring basis.

L

LTM: Last Twelve Months. The last twelve closed months, used to normalize metrics outside the fiscal year.
LTV: Lifetime Value. The present value of the margin expected from a customer over the whole relationship.

M

M&A: Mergers and Acquisitions: transactions involving the purchase, sale, merger or absorption of companies.
MRR: Monthly Recurring Revenue. Contracted monthly recurring revenue.
Multiple: The ratio between a company's value and a financial metric, such as revenue, EBITDA or profit. Used to compare similar companies.

N

NDA: Non-Disclosure Agreement. A confidentiality agreement signed before sensitive information is exchanged.
Net debt: Gross financial debt minus available cash and equivalents. It is the bridge between Enterprise Value and Equity Value.
NOPAT: Net Operating Profit After Taxes. Operating income after taxes, the base of the firm's free cash flow.
NRR: Net Revenue Retention. A cohort's revenue plus expansion, minus contraction and churn, divided by the starting revenue.
NWC: Net Working Capital: operating current assets minus operating current liabilities.

O

OPEX: Operating Expenditure. The recurring operating expenses of the business, in contrast to CAPEX.
Outlier: An observation far removed from the rest in a sample of comparables. It must be excluded with a documented justification.

P

P/B: Price to Book. Compares market value with book equity.
P/E: Price to Earnings. The multiple relating market value to net profit.
Payback: The time needed to recover an investment. In SaaS, CAC payback measures how many months of customer margin cover the acquisition cost.
Private equity: Funds that invest in established companies, generally acquiring a relevant stake or control.
Projection horizon: The number of years projected explicitly before terminal value. Generally 5 years for mature businesses and 7 to 10 when stabilization takes longer.

Q

Quartile: The division of a sample into four equal parts. In comparable multiples, presenting the 1st quartile, the median and the 3rd quartile is mandatory: the average alone hides dispersion.
Quota: A fraction of the capital of a limited liability company, the equivalent of a share in a corporation.

R

ROIC: Return on Invested Capital. Compared with the WACC, it indicates whether the company creates or destroys value.
Round: An investment round. The usual sequence: pre-seed, seed, Series A, Series B and onward.
Runway: How long the company can operate on the cash available, at the current burn rate.

S

SAFE: Simple Agreement for Future Equity. An instrument that converts the investment into equity in a future round, without setting a valuation at the time of investment.
Self-sustaining (scale-up): The stage at which the business can grow on its own resources, without depending on new fundraising.
Standalone: The value of the company on its own, without considering synergies specific to a given buyer.
Synergy: The gain that arises from combining two companies: additional revenue or cost reduction. It is not part of standalone value.

T

Tag along: The minority shareholder's right to sell their stake on the same terms obtained by the majority holder.
Take rate: Transaction revenue divided by the volume processed. It measures how much of what it transacts the platform retains.
TAM, SAM and SOM: Total addressable market, market available to the business model and market effectively reachable.
Teaser: A short and often anonymous document presenting an investment opportunity to potential interested parties.
Terminal value: The value assigned to the flows beyond the explicit projection horizon, through perpetual growth or an exit multiple.
TPV: Total Payment Volume. The total volume of payments processed. Like GMV, it is not revenue.

U

Unit economics: The set of metrics measuring profitability per business unit, normally per customer: CAC, LTV, payback and contribution margin.
Upside: The potential for an asset or business to appreciate above the base case.

V

Valuation: The process of estimating the value of a company, stake or asset, at a given valuation date and for a specific purpose.
Valuation date: The date the appraised value refers to. A valuation without a valuation date cannot be interpreted.
Venture capital: Funds that invest in companies with high growth potential, normally at an early or expansion stage.

W

WACC: Weighted Average Cost of Capital, blending equity and debt. The rate used to discount the firm's cash flow.
Warrant: An instrument giving the holder the right to acquire equity at a predefined price, within a set period.
White label: A model in which a partner offers the platform under its own brand, without displaying the supplier's brand.

Y

Yield: The percentage return of an investment relative to the capital invested, usually expressed on an annual basis.

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