Finance Glossary

Acquisition
The purchase of a business. This may take the form of either the purchase of the equity to trade on the business in its current form or, alternatively, the purchase of certain, or all assets to be utilised by a different company.

Administration
A Court Order placing a company into the control of an Administrator to preserve the business and protect it from action by its creditors in order to allow reorganisation, or a more advantageous realisation of its assets.

BACS (Bank Automated Clearing System)
An electronic means of funds transfer, by which cleared funds reach the beneficiary's bank account, three working days after they are remitted.

Bullet Repayment
The profile of the repayment of a term facility, whereby the principal is repaid in one lump sum at the end of the facility, with only accrued interest being repaid in the meantime.

Charge
A registered interest, filed at Companies House, in some or all of a company's assets. The charge may be "fixed" against a specific asset or "floating" over all assets to crystallise at some future point in time.

Chargeholder
An individual or corporate body holding an interest in assets of a company.

Chattels
This is one of those funny legal words which means simply 'the things you own'. The legal definition of chattels is simply property of any kind other than freehold land. In practice it will mean your moveable items such as furniture or personal possessions. Excel do not take the value of these into account as security.

Client
The borrower.

Collateral
Assets offered by a client as security for the advance. Other assets may be included within the overall security offered, but collateral refers to the specific assets against which the advance is measured.

Corporate Guarantee
A guarantee provided by one company (typically a Holding Company or Associate to GE in respect of a client company). To be called on in the event realisations from the charged assets of the company are insufficient to clear the company's liability to GE under the terms of the Agreement.

Covenant
A specific condition within an agreement.

Debenture
A charge over an asset or assets of a company to be registered at Companies House.

Deed
A legal document which has been "signed, sealed and delivered" not just signed, but signed and witnessed, with a seal appended and formally handed over. A deed has special significance in law, for example, a conveyance has no force in law unless it is in the form of a deed. Title to both freehold and leasehold property may only be transferred by deed.

Deed of Release
Required where a lender/chargeholder (typically a bank) has a pre-existing charge over the debts/assets to be funded. This document permits transfer of rights to in-coming funder.

Deferred Consideration
Portion of purchase price payable after sale has been completed.

Desk Top Valuation
Form of asset valuation produced by a valuer from list of assets without the need for physical on-site review.

Escrow
Funds required to complete a transaction paid to a solicitor's client account and held pending completion are said to be "held in Escrow".

FSA (Financial Services Authority)
On 1 December 2001 the FSA assumed its full powers and responsibilities under the Financial Services and Markets Act 2000. It is the single statutory financial regulator in the UK, having taken over the work of a total of nine previous watchdog bodies with responsibilities ranging from covering the sale of endowments and insurance to controls on City dealers trading in derivatives. Almost all kinds of financial services firms must get permission (authorisation) from the FSA to do business in the UK. The FSA regulates banks, building societies, credit unions, insurance and investment firms (stockbrokers and fund managers) and independent financial advisers. The FSA is also responsible for Lloyd’s Insurance Market. In 2004 its powers will be extended to cover general insurance advice and mortgage lending and advice. The FSA does not cover the area of Commercial Lending Excel Securities in involved in.

Fixed Charge
A charge over a specified asset registered by a chargeholder at Companies House.

Floating Charge
A general charge over a class of or all of the assets of a company.

Freehold
The legal right to hold land/property as the absolute outright owner, free of payment or any other duty owed to another party. As a freeholder, you can then offer to rent your land/property to parties with whom you'll have a legal agreement. In other words, you may create leaseholders. Most houses are sold as freehold properties but most flats are sold on a leasehold basis.

Guarantor
An individual or company providing a guarantee in respect of a client's liability under a facility, which may arise.

Leasehold
Holding a 'leasehold' gives you the right of possession, but not ownership, of a property for an agreed period of time. Ultimately, ownership remains with the freeholder. The duration of the right of ownership is usually a fixed term granted by the lease. The lease will set out details of rents and obligations such as repairs etc. Leasehold is in direct contrast to Freehold where ownership is absolute.

Loan To Value (LTV)
The 'loan to value' ratio is ratio between the size of the loan you are seeking and the mortgage lender's valuation of the property.

Local Search
It is an application to the local authority for a certificate providing certain information about a property. It is also taken to mean the certificate itself which will show whether the property is affected by road building or outstanding matters such as sanitary notices, planning permission for any building work previously carried out, connection to the mains sewer, etc.

MBI (Management Buy In)
The acquisition of a business by an external management team.

MBO (Management Buy Out)
The acquisition of a business by an internal management team.

Merger
A transaction to join together the assets of two or more separately owned businesses, into one group.

Personal Guarantee
A guarantee provided by a director of a company. To be called upon in the event realisations from the assets of the company are insufficient to clear the company's liability under the terms of the agreement.

Receivership
Where a company finds itself in serious financial difficulties, a receiver may be appointed to collect and manage the assets of the company for the benefit of its creditors.

Redemption
This has a strict legal definition and is the right of the mortgagor to recover mortgaged property on repayment of the loan and any interest due.
What this legalese means is that once you, as the borrower, have finished repaying the loan you took out (the mortgage), the property is yours and the lender has no further claim on it.

Registered Address
The legal address of the company for serving official documents

Security
This is a generic term relating to either the assets offered by the client, or the legal document relating to the assets. For example, if commercial property were being taken as collateral for a loan, both the physical asset and the mortgage document could be referred to as security.

Surveyor
A surveyor is a person qualified by the Royal Institution of Chartered Surveyors ( RICS) or the Incorporated Society of the Valuers and Auctioneers to carry out valuations and surveys of properties.