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Glossary of Terms

Set out below is a Glossary of standard transactional terminology for private equity and corporate finance transactions. Use the filter menu if you are looking for a specific term, or to navigate the Glossary alphabetically.

RatchetA mechanism whereby management's equity stake may be increased or decreased on the occurrence of future events. The equity allocation varies depending on the performance of the company and the return the institutional investor achieves.

RecapitalisationThis is a change in the way a company is financed. It is a result of an injection of capital through either equity or debt.

Restrictive covenantsAn agreement which constrains the way in which a party can act and is binding on the party who is giving that covenant.

Reverse takeoverA reverse takeover is where a larger unlisted company achieves a stock market listing by acquiring a smaller listed company. The acquisition is achieved by the listed company issuing new shares to acquire the unlisted company. As the unlisted company is larger than the listed one, the unlisted company has to issue so many new shares that the owners of the unlisted company end up with a controlling stake.

ROCEReturn on Capital Employed

ROIReturn on Investment