Walking into a boardroom to pitch your business to potential funders for the first time can be an intimidating thing. On top of that, if you don’t have much experience negotiating deals in a boardroom setting, it can feel like being in a foreign country where no one speaks your language. Business acronyms, slang and legal jargon often make their way into boardroom conversation, so I want to make sure you understand what some of the more common phrases mean. I’ve presented a list below to make your first boardroom pitch a less foreign experience.
Above board: Done properly from all aspects: ethically and legally.
Actionable narrative: Providing information that can be acted on or used to make a decision.
At the end of the day: What it is all about - the objective.
Baked-in: Typically made in reference to a valuation. For example, “the value of this pending acquisition is already baked into the share price.”
Bank shot: Accidentally achieving a successful result. When things don’t go according to plan, but still work out very well, that’s a bank shot.
Bang for your buck: Getting the best value for your money.
Basically: Just a substitute for ‘um’. Often preludes a bullshit statement.
Big Hitter: Someone with a strong track record of success - one who typically invests substantial sums of money, on a regular basis, into various ventures.
Bootstrap: To start a business with little to no outside financial help.
Bean Counter: Derogatory term for an accountant.
Best in Breed: The absolute most talented firm or individual in a specific industry.
Bleeding: Losing money.
Burn rate: Total monthly fixed costs.
Consultant: Fancy word for contract worker.
Council: Legal advice.
Compliant: In line with industry regulations.
Cross T’s and dot the I’s: Finalizing all the details and making sure everything is perfect.
Capital injection: Providing a company with money. This is typically done for a company that is desperate for cash. It is done in return for an ownership percentage.
CC: Conference call.
DD: Acronym for due diligence. DD means to conduct a thorough investigation, typically for an investment.
Feelers: Testing the fundraising waters with investors or consumers. Seeing what kind of interest there is for your company, product etc.
Hot air: Another term for bullshit.
He/She is a hustler: In most circles this is a negative statement, but not in business. It’s positive because it means someone is a hard worker with an ability to close the deal.
LOI: Letter of intent. This is an agreement that describes what party A is willing to do to take a stake in party B or its asset(s). It is typically the initial document signed by two parties in the early stage of an acquisition.
MOU: Memorandum of understanding. A soft, legal agreement between two parties that one may buy, sell or make some kind of a deal down the road pending certain milestones are hit. MOUs are good, but they often fall apart given how many variables they stipulate must go according to plan in order for them to be executed. An LOI is often viewed as more serious than an MOU.
Name equity: The value of someone’s name based on their past success. Someone like Richard Branson has a tremendous amount of name equity because of all his past successes. Having someone with substantial name equity in a management role provides the company with ample opportunity to raise capital at favourable terms. The flip side of that is someone who is starting a business for the first time, fresh out of college. This person has zero name equity and potentially faces a challenging road to raise capital. Someone like this should partner up with an individual who has significant name equity.
NDA: Non-disclosure agreement. This is a legal document that, when signed, puts a muzzle on everyone involved. An NDA is used when outsiders of a company are being shown confidential information. I recently signed a NDA to take a look at a new technology of a company’s that was not yet patented.
Nickel and dime: Another term for being cheap and tight with money.
Private Placement: This is a term used by publicly traded companies. When these companies need to raise capital to continue business operations, they often do so by selling shares in their company (with a warrant attached to the sale) privately. While it raises money and pads the company treasury, it is also dilutive, meaning those who owned shares in the company prior to the private placement will see their ownership decreased on a percentage basis.
Pubco: A publicly traded company.
Regulations: The rules governed by an industry watchdog that absolutely must be followed.
Restructuring: This can mean one of two things. It either means that a management change (typically multiple roles) is on the table; or it means the capital structure (the share structure) of a company needs to be improved. Improving the share structure often results in buying back stock, paying a dividend or eliminating a certain percentage of the outstanding shares. For big, successful companies, a share restructuring can also mean doing a stock split, making the shares more affordable, so to speak.
Rollback: When a company decreases the amount of shares outstanding. For publicly traded companies this often requires a shareholder vote as it erodes the amount of shares investors own in the company. Rollbacks are often conducted after a business model fails and the publicly traded company wants a fresh start, typically with a new venture.
Running on fumes: Typically in reference to a company that has run out of money.
Rubik’s Cube: A very difficult problem to solve.
Scalability: Is your product profitable on small and large scale production? Do margins remain relatively stable or increase if production increases? You’ll often hear the question, “is it scaleable?”
Seed round: The initial round of financing. This is typically completed by venture capitalists and/or friends and family.
Stand up guy: Reliable and reputable.
Sweat Equity: The amount of time, energy and sacrifices (non-monetary) put into a business or project.
Synergistic relationship: In short, this means a relationship that bears equal fruit for both parties involved. You scratch my back, I’ll scratch yours.
Tiger by the tail: To have favourable control over the end result.
Treasury: How much money the company has in cash and liquid assets.
VC: Venture capitalist. This is a firm or individual who invests in startup companies for a living.
Warrant: Gives an investor the ability to buy shares in a company, during a specified period of time, at a set price.
When the rubber hits the road: A point in time when it will be known if the business will succeed or fail.
There you have it. These are some of the most common phrases used in boardrooms and business meetings that are rarely used in everyday conversation. Understanding business terminology will help you navigate through your first boardroom pitch. Break a leg!
Stay hungry,
Aaron
