Corporate Finance Glossar

A valuation cap is a term used in convertible note financing that sets the maximum conversion price for the note, giving early investors the advantage of converting their investment into equity at a lower valuation if the company’s future valuation exceeds the cap. This mechanism protects early investors by ensuring they receive a favorable equity position relative to later investors.

A value creation plan converts a strategy or investment thesis into prioritized initiatives with owners, milestones, resources, financial effects and measurable outcomes.

Vendor due diligence is a seller-commissioned independent review of defined business matters prepared for controlled use by prospective buyers or financiers.

Venture debt is lending to venture-backed or high-growth companies, commonly combining cash interest and fees with covenants, security or equity-linked consideration.

A vesting schedule sets when a founder, employee or adviser earns the right to keep equity, options or another long-term incentive.

A virtual data room is a controlled digital repository for organizing, releasing and recording confidential information during diligence and transaction execution.