Your FREE Series 79 Flashcards 2026 – 250+ Cards

Equity value + debt + preferred + minority interest − cash; capital-structure-neutral.

The SEC's electronic system for public-company filings; the primary IB data source.

Annual report with audited financial statements.

Quarterly report (unaudited); Exchange Act Rule 13a-13 / 15d-13.

Current report disclosing material events within 4 business days.

Filing made when a company changes its fiscal year.

Filed by a >5% beneficial owner with intent to influence/control (activist).

Short-form 13D for passive >5% holders / institutions.

Quarterly holdings report by managers with $\ge$$100M in 13(f) securities.

Insider ownership filings: initial / changes (2 business days) / annual.

Crossing >5% triggers a Schedule 13D or 13G filing.

Governs research analysts/reports; separates research from investment banking.

Separation preventing IB from improperly influencing research.

Internal source for market demand, pricing, structure, and covenants.

Snapshot: $\text{Assets} = \text{Liabilities} + \text{Stockholders' Equity}$.

Over a period: revenue − COGS − SG&A − D&A − interest − taxes = net income.

$\text{CFO} + \text{CFI} + \text{CFF} =$ net change in cash.

Property, plant & equipment — long-term tangible assets.

Additional paid-in capital — equity raised above par value.

Intangible: purchase price paid above the fair value of net identifiable assets.

Cost of goods sold — the direct costs of production.

Selling, general & administrative expenses.

$\text{Current assets} - \text{current liabilities}$.

Cash received before the good or service is delivered (a liability).

An expense like depreciation that reduces net income but is added back in CFO.

$\frac{\text{current assets}}{\text{current liabilities}}$.

$\frac{\text{current assets} - \text{inventory}}{\text{current liabilities}}$.

$\text{total debt} - \text{cash \& equivalents}$.

$\frac{\text{total debt}}{\text{shareholders' equity}}$.

$\frac{\text{debt}}{\text{debt} + \text{equity}}$.

$\frac{\text{EBIT}}{\text{interest expense}}$.

The headline leverage metric in IB and LBO analysis.

$\frac{\text{FCF}}{\text{market cap}}$.

Earnings before interest & taxes (operating income).

$\text{EBIT} + \text{depreciation \& amortization}$.

$\text{EBITDA} + \text{rent}$.

$\frac{\text{net income} - \text{preferred dividends}}{\text{weighted avg shares}}$.

$\frac{\text{gross profit}}{\text{revenue}}$.

$\frac{\text{EBIT}}{\text{revenue}}$.

$\frac{\text{net income}}{\text{revenue}}$.

$\frac{\text{net income}}{\text{total assets}}$.

$\frac{\text{net income}}{\text{shareholders' equity}}$.

$\frac{\text{NOPAT}}{\text{invested capital}}$.

Earnings adjusted for nonrecurring / extraordinary items.

A one-time gain or loss excluded to assess core performance.

$\text{share price} \times \text{diluted shares outstanding}$.

A capital-structure-neutral valuation multiple.

$\frac{\text{price}}{\text{earnings per share}}$.

$\frac{\text{price}}{\text{next-twelve-months EPS}}$.

$\frac{\text{price}}{\text{book value per share}}$.

$\frac{\text{P/E}}{\text{earnings growth rate}}$.

$\frac{\text{price}}{\text{sales per share}}$.

Present value of unlevered FCF + terminal value, discounted at WACC.

$\frac{E}{V}R_e + \frac{D}{V}R_d(1-T)$; the DCF discount rate.

Value beyond the projection period (Gordon Growth or exit multiple).

$TV = \frac{FCF_n(1+g)}{WACC-g}$.

Sum of discounted cash flows minus the initial investment.

The discount rate at which $\text{NPV} = 0$.

Dividend discount model: $\text{value} = \frac{D_1}{r-g}$.

$\left(\frac{\text{End}}{\text{Begin}}\right)^{1/n} - 1$.

A measure of systematic (market) risk.

$R_e = R_f + \beta(R_m - R_f)$; the cost of equity.

A deal that increases the acquirer's pro forma EPS.

A deal that decreases the acquirer's pro forma EPS.

An all-stock deal is accretive when the acquirer's P/E > the target's.

Value each segment separately, then add them up.

Last twelve months (trailing).

Next twelve months (forward).

$\text{NOPAT} - (\text{invested capital} \times \text{WACC})$.

Value via public peers' trading multiples (market-based).

Value via multiples paid in past M&A deals (includes a control premium).

The extra paid above market price to acquire control.

A bar chart showing valuation ranges by method.

An LBO sets the valuation floor — the most a sponsor could pay at a target IRR.

First-in-first-out; in rising prices → lower COGS, higher income.

Last-in-first-out; in rising prices → higher COGS, lower income/taxes.

The difference between LIFO and FIFO inventory values.

A separate taxable entity (double taxation).

A pass-through entity ($\le$100 shareholders).

Limited liability company; pass-through and flexible.

Master limited partnership; a publicly traded pass-through.

Real estate investment trust; must distribute $\ge 90\%$ of taxable income.

Pooled capital making private / buyout investments.

Qualified Institutional Buyer — owns/manages $\ge$$100M in securities (Rule 144A).

Holds $\ge$$5M in investments (the 3(c)(7) threshold).

$200K/$300K income or >$1M net worth excluding home (Rule 501).

Initial public offering — a company's first public sale of stock.

An additional public offering by an already-public company.

Private investment in public equity.

New shares; proceeds go to the company (dilutive).

Existing shares sold by holders; proceeds go to the selling shareholders.

An agreement to sell securities at a future date and price.

Growth at a reasonable price (an investment objective).

A strategy trading on announced merger spreads.

Investigation to verify facts and satisfy disclosure obligations.

No untrue material fact; no omission that makes statements misleading.

Defines reasonable investigation — the §11 due diligence defense.

A repository of confidential documents for buyer due diligence.

Updating DD just before closing to confirm no material change.

2002 act enhancing financial disclosure and internal controls.

Prohibits most personal loans to executives.

Requires disclosure of insider / principal-stockholder transactions.

Management assessment of internal control over financial reporting.

An obligation not recorded on the balance sheet (a DD red flag).

Going-private transactions (heightened disclosure).

Issuer purchases during a third-party tender offer.

Governs registration & disclosure of new securities offerings.

Governs secondary trading, reporting, and broker-dealers.

The master prohibition governing the registration/offering process.

No offers or sales permitted (gun-jumping is prohibited).

Oral offers, red herring, and IOIs allowed; no sales.

Sales permitted; the final prospectus is delivered.

Document filed with the SEC (Form S-1, etc.) to register an offering.

The disclosure document delivered to investors; §2(a)(10) definition.

Preliminary prospectus used in the waiting period; has no final price.

A limited offering notice (Rule 134); not a prospectus.

Non-binding investor interest collected during the waiting period.

Civil liability for a false / misleading registration statement.

Liability for §5 violations (12(a)(1)) and prospectus misstatements (12(a)(2)).

Anti-fraud in the offer or sale of securities.

Preempts state blue-sky regulation for covered securities.

A written offer beyond the statutory prospectus; Rules 164 & 433.

Well-known seasoned issuer; broad communication freedom + automatic shelf.

Register securities now and sell them over time.

Auto-effective shelf registration for WKSIs.

Communications (tombstones) not deemed a prospectus.

When broker-dealer research reports are permitted around a distribution.

30-day bright line before filing for non-gun-jumping communications.

A JOBS Act on-ramp issuer with scaled disclosure.

Created the EGC IPO on-ramp and testing-the-waters.

Non-financial disclosure requirements.

Form and content of financial statements.

Bans selective disclosure of MNPI by issuers.

Registers a class of securities for ongoing reporting (12(a)/12(g)/12(j)).

FINRA review of underwriting compensation and arrangements.

Public offerings with conflicts of interest; may require a QIU.

An independent underwriter in conflicted offerings.

Disclosure of a control relationship with the issuer.

Disclosure of participation or interest in a distribution.

Governs the syndicate members' relationship.

Adds non-syndicate dealers to the selling group.

The issuer-to-lead-underwriter contract.

Insiders agree not to sell for a period (often 90–180 days) post-IPO.

The underwriter buys the whole issue and bears unsold-share risk.

The underwriter acts as agent and sells only what it can.

The deal is cancelled unless 100% is sold.

The underwriter backstops unsubscribed shares in a rights offering.

Two ways a deal is awarded and priced.

Prohibited representations in contingency offerings.

Funds in contingency offerings must be held in escrow.

Anti-manipulation rules during a distribution.

Restricts distribution participants during the restricted period.

Restricts issuers / selling holders during a distribution.

Disclose price and concessions in selling agreements.

Compiling investor demand / IOIs to price and allocate the deal.

Marketing presentations to institutional investors.

Lets the syndicate sell up to 15% extra shares.

A bid supporting price; never above the offering price (Reg M Rule 104).

Reclaims concessions from members whose shares are flipped.

Management fee + underwriting fee + selling concession.

The portion of the spread paid to the lead / bookrunner.

The portion of the spread paid to the selling firm.

Pooled institutional shares allocated by the bookrunner.

Pot economics awarded by who generates demand.

An investor instruction on which firm gets credit for an order.

Nasdaq passive market making during a distribution.

Stabilizing and other supporting activities.

Bars covering a syndicate short with offering shares after shorting in the restricted period.

Restricts equity-IPO sales to restricted persons (anti-spinning).

Broker-dealers / employees / family barred from buying equity IPOs.

Sales in fixed-price offerings at the public offering price.

Notification requirements for offering participants.

Standard of conduct for retail recommendations (15l-1).

Customer relationship summary disclosure (Rule 17a-14).

Records that broker-dealers must make.

Records that must be preserved (retention / WORM storage).

FINRA general recordkeeping requirements.

Settlement of syndicate accounts.

The archive of all offering documents and correspondence.

A security exempt from registration (e.g., Reg A, government).

A transaction exempt from registration (e.g., a Reg D private placement).

The intrastate offering exemption (§3(a)(11)).

Small-issues exemption: Tier 1 $20M, Tier 2 $75M.

The statutory private-placement exemption (no public offering).

The safe harbor for §4(a)(2) private placements.

Reg D definitions, including the accredited investor.

Reg D general conditions (integration, resale limits, information).

File a Form D notice with the SEC.

Reg D exemption up to $10M / 12 months.

Unlimited raise; no solicitation; up to 35 non-accredited sophisticated investors.

Unlimited raise; solicitation allowed; accredited-only with verification.

Notice of an exempt offering, filed within 15 days of the first sale.

Privately placed securities with resale limits and a legend.

Resale safe harbor for restricted/control securities (6-month/1-year holding).

Resale of restricted securities to QIBs.

Exemption for offers and sales made outside the U.S. (Rules 901–904).

Private placement memorandum (the private-offering disclosure document).

An anonymized one-page summary to attract investor interest.

A document outlining expected pricing and structure.

Engagement of a broker to place a private offering.

Member private placements of their own securities.

An affiliate whose resales are restricted.

Contract retaining the advisor (scope, fees, tail, exclusivity).

Advising the seller / target.

Advising the acquirer.

An anonymized one-pager marketing the target.

Confidential Information Memorandum describing the target for buyers.

Protects confidential deal information.

A non-binding outline of proposed deal terms.

The binding merger or purchase agreement.

The initial benchmark bid in a §363 / auction sale.

An operating company acquiring for synergies.

A PE firm acquiring via an LBO for return.

Pre-arranged financing offered by the seller's advisor to buyers.

Buyer acquires the entity with its assets and liabilities (seller-friendly).

Buyer acquires selected assets, leaving liabilities (buyer-friendly; step-up).

A combination requiring target board + shareholder vote (proxy).

A direct offer to shareholders to buy shares (can be hostile).

Distribute subsidiary shares to existing holders (tax-free if §355 met).

Holders exchange parent shares for subsidiary shares.

The sale or disposal of a business unit.

An IRC §368 structure deferring tax (e.g., stock-for-stock).

Treats a stock purchase as an asset purchase for tax (step-up).

Excise tax on excess change-of-control payments to executives.

Restructuring the mix of debt and equity.

Cost or revenue benefits from combining companies.

Whether a deal raises or lowers pro forma EPS.

A combined post-deal financial projection.

Pre-merger antitrust notification to the FTC/DOJ + a waiting period.

Sponsor buyout with heavy debt targeting an IRR; sets a valuation floor.

A defense diluting a hostile acquirer.

A defense electing directors in tranches to slow takeovers.

A state law stripping voting rights from large blocks.

A contract clause triggered by a takeover.

An advisor opinion that the consideration is financially fair to shareholders.

Requires conflict-of-interest disclosure in fairness opinions.

An independent board committee overseeing a conflicted transaction.

An internal advisor committee approving the opinion.

Requirements before closing (approvals, vote, financing, no MAC).

Material adverse change/effect clause allowing an exit.

Solicitation document for a shareholder vote (Schedule 14A).

Registration statement for stock-for-stock business combinations.

When a merger / reclassification is an offer or sale needing registration.

Filing of communications in business combinations.

The proxy statement under §14(a).

The M&A disclosure item in the proxy.

Integrated disclosure rules for M&A communications.

1968 amendments regulating tender offers (§§13(d)/(e), 14(d)/(e)).

The tender-offer statement filed by the bidder.

The target's response / recommendation to a tender offer.

Issuer self-tender offer.

The offer is open to all holders; all get the highest price.

A tender offer must stay open $\ge$20 business days.

The target must state its position within 10 business days.

Bars trading on MNPI in the tender-offer context.

Anti-short-tendering in partial tender offers.

Bars purchases outside the tender offer while it is open.

A heightened-disclosure transaction taking a company private.

Claim order: secured → unsecured → preferred → common.

First-lien lender; the highest claim priority.

Debt ranking below senior debt in priority.

A hybrid debt/equity layer between senior debt and equity.

A lender or supplier with no collateral claim.

The bond contract (with a trustee; the Trust Indenture Act).

A loan contract with covenants.

A restriction on borrower actions (debt, dividends, asset sales).

A maintenance test (e.g., maximum leverage, minimum coverage).

A breach triggering lender remedies.

Reorganization bankruptcy; the debtor continues operating.

Liquidation bankruptcy; assets are sold and the entity dissolved.

The Chapter 11 plan creditors vote on and the court confirms.

Debtor-in-possession financing with super-priority.

Existing management running a Chapter 11 company.

A sale of assets free and clear within bankruptcy.

A body representing unsecured creditors in a case.

A court-appointed party managing or liquidating the estate.

A prepayment penalty compensating lenders for early refinancing.

A closing confirmation that representations remain true.

A fee paid if a seller terminates to accept a competing bid.

A dissenting shareholder's right to a court-determined fair value.