IFMP Investment Banking and Analysis Certification (IBAC), Pakistan key terms

The first sale of a company's shares to the public on a stock exchange, allowing it to raise capital from outside investors and giving existing shareholders a market for their holdings.

A formal disclosure document issued to prospective investors that sets out a company's business, financial history, risks, use of proceeds, and the terms of the securities being offered.

A price discovery process in which an underwriter collects bids from institutional investors across a price range to set the final offer price and allocate shares.

The process by which an investment bank takes on the risk of selling a new securities issue, often buying the securities from the issuer and reselling them to investors.

The difference between the price paid to the issuing company and the price at which the securities are sold to investors, which compensates the bank for risk and distribution effort.

An underwriting arrangement in which the bank purchases the entire issue from the issuer and bears the risk of any unsold securities.

An underwriting arrangement in which the bank sells as much of the issue as it can but does not guarantee the issuer a fixed amount of proceeds.

A contractual restriction preventing pre-IPO shareholders and insiders from selling shares for a set period after listing, intended to protect the newly listed share price from heavy selling pressure.

The investigation an adviser performs into a target or issuer, covering financial, legal, tax, operational, and commercial matters, to verify facts before a transaction or disclosure.

A secure physical or virtual repository where a seller or issuer gives advisers controlled access to confidential documents needed for due diligence.

The branch of corporate finance dealing with the buying, selling, combining, or restructuring of companies and their business units.

A test of whether a transaction increases or reduces the acquirer's earnings per share, calculated by comparing the combined earnings with and without the deal.

The accounting exercise of assigning the consideration paid in an acquisition to identifiable assets acquired and liabilities assumed, with the remainder recorded as goodwill.

An intangible asset recorded on acquisition, equal to the excess of purchase consideration over the fair value of identifiable net assets acquired.

The additional value created when two businesses combine, for example through cost savings, shared overheads, or cross-selling, beyond what each could achieve alone.

The acquisition of a company using a significant amount of borrowed money, with the target's assets and cash flows typically used as security and repayment source.

The extent to which a company or transaction is funded by debt rather than equity, commonly measured as debt divided by EBITDA or by total capital.

Contractual undertakings in a loan or bond that require the borrower to maintain certain financial ratios or restrict actions such as additional borrowing, dividends, or asset sales.

A presentation prepared by an investment bank to win a mandate, setting out its credentials, market views, transaction ideas, and indicative valuation analysis for a client.

A written assessment by an independent adviser stating whether the consideration in a transaction is fair, from a financial point of view, to a specified party such as shareholders.

A brief advertisement or announcement listing the parties and advisers involved in a completed capital markets or advisory transaction, used for marketing credentials.

The process of estimating what an asset, business, or security is worth, using methods such as discounted cash flow, trading comparables, and precedent transactions.

A valuation method that projects future free cash flows and discounts them to present value using a rate reflecting the risk and time value of money.

The blended required return on a company's debt and equity, weighted by their share of capital, used as the discount rate in a discounted cash flow analysis.

A model that estimates the required return on equity as the risk-free rate plus a beta-adjusted market risk premium.

A measure of how much a share's returns move relative to the overall market, used to estimate systematic risk and the cost of equity.

The estimated value of a business beyond the explicit forecast period in a discounted cash flow, often calculated using a perpetuity growth rate or an exit multiple.

The cash a business generates after funding the investment needed to maintain and grow its asset base, available to repay debt or distribute to investors.

Earnings before interest, tax, depreciation, and amortisation, a widely used proxy for operating cash earnings and a common basis for valuation multiples and leverage ratios.

The total value of a business to all capital providers, calculated as market capitalisation plus net debt and other adjustments such as minority interests.

The value attributable to a company's shareholders, equal to enterprise value less net debt and other claims ranking ahead of equity.

The total market value of a listed company's shares, calculated as the share price multiplied by the number of shares outstanding.

A ratio that expresses value relative to a financial metric, such as enterprise value to EBITDA or price to earnings, used to compare companies quickly.

A relative valuation method that applies multiples derived from similar listed companies to the financial metric of the company being valued.

A relative valuation method that applies multiples paid in past acquisitions of similar companies, typically including a control premium, to the target's financial metric.

The additional amount paid above the prevailing market share price to acquire a controlling stake, reflecting the value of control over the business.

An assumed valuation multiple applied to a future financial metric, such as EBITDA at the end of a holding period, to estimate terminal or sale value.

The annualised discount rate at which the present value of an investment's expected cash inflows equals its initial outflow, used to judge return attractiveness.

A company's net profit divided by its number of shares outstanding, showing how much profit is attributed to each share.

A reduction in the carrying value of an asset on the balance sheet when its recoverable amount falls below book value, recorded as a charge in the income statement.