Earnout

An arrangement in which sellers of a business may receive additional future payments for the business based upon economic performance of the sold business or the buyer (including the sold business) after the sale.

EASD (European Association of Securities Dealers)

An association of securities houses, investment banks, venture capital firms, professional advisors, and others formed to promote the development of securities markets in Europe for growth companies. EASD’s ambition is to be the most effective organisation to foster the best conditions for seamless European investment and trading. The creation of the EASDAQ stock market (now Nasdaq Europe) was one of its first initiatives. EASD has merged with APCIMS, and now has offices in London and Brussels.

EASDAQ

See ‘Nasdaq Europe’.

EBIT

Earnings before interest and taxes – a financial measurement often used in valuing a company.

EBITDA

Earnings before interest, taxes, depreciation and amortisation – a financial measurement used in valuing a company.

EDGAR

See ‘Electronic Data Gathering, Analysis, and Retrieval’.

Effective Date

(USA) The date of the SEC order declaring the registration statement for a public offering to be effective, at which time the sale of shares to the public can commence. See ‘Acceleration Order’, ‘Acceleration Request,’ and ‘Going Effective’.

Effective Par

(USA) The par value for preferred stock that would ordinarily correspond to a given dividend rate.

Electronic Data Gathering, Analysis, and Retrieval (EDGAR)

(USA) The SEC’s system required to be used since 1995 by substantially all public companies to file required reports, such as quarterly and annual reports with the SEC, electronically, those enabling electronic retrieval of these filings through the Internet. Until 2002 foreign companies registered as public companies in the USA were not required to file electronically. Starting in November 2002, foreign companies will also be required to file electronically through EDGAR.

Employee Retirement Income Security Act (ERISA)

(USA) The Employee Retirement Income Security Act of 1974, the principal USA law regulating retirement and employee benefit plans.

Employee Stock Purchase Plan

(USA) A plan under which key employees are given the right to purchase shares of the company at a future date on favourable terms. Under the USA Internal Revenue Code, if a plan meets certain requirements, employees can purchase stock at 85% of market price without any USA tax consequence, though the rules in other countries are different.

Employee Stock Repurchase Agreement

(USA) An arrangement in which a corporation sells stock to its employees but reserves the right to repurchase it under certain conditions.

ERISA

See ‘Employee Retirement Income Security Act’.

EURIBOR

The interest rate at which Euro denominated interbank term deposits are offered within the Eurozone.

Euroclear

Euroclear is an international clearing organisation based in Brussels, Belgium, specialising in securities clearing, settlement, and custody services. In July 2002, Euroclear announced plans to merge with CREST. See ‘CREST’.

EURONEXT

The name of the exchange resulting from the merger of the Amsterdam, Brussels, and Paris stock exchanges in 2001. The Madrid Stock Exchange has since joined and EURONEXT has acquired LIFFE, the London International Financial Features and Options Exchange.

European Option

See ‘European-Style Option’.

European-Style Option

An option that can only be exercised for a short, specified period of time just prior to its expiration, usually a single day. Also called European option.

EVCA (European Venture Capital Association)

An association formed to promote and facilitate European private equity and venture capital. It has over 500 member organisations from across Europe and North America. Headquartered in Brussels.

Exemption or Exempt from Registration

(USA) An exemption from the statutory requirement to register the offer and sale of a security with the SEC under the Securities Act of 1933. Exemptions are provided for certain types of securities (such as government issues and pension plans) and certain types of transactions (such as private placements and offerings to existing security holders). Similar concepts exist in the UK and other jurisdictions but the meanings and applicability may vary widely.

Exercise Price

The price at which shares that are subject to a stock option may be purchased or sold. Also known as the ‘strike price’.

Exit Strategy

The method by which an investor anticipates liquidating its investment, such as sale of the business, public offering, etc.

Expense Allowance

An amount paid by the issuer of a security to an underwriter (most common in smaller, higher risk offerings) to reimburse it for expenses incurred in connection with a securities offering. An expense allowance may be accountable (reimbursement against documented out-of-pocket expenses) or non-accountable (typically a percentage of the offering amount without documentation of the expense).