Category: Business – This Explainer

A divestiture can be a sale, spin, closure, or regulatory remedy. This explainer covers portfolio focus, buyer selection, carve-out financials, stranded costs, transition services, antitrust remedies, execution, and value assessment.

An ESOP gives employees a retirement-plan interest in employer stock through a trust. This explainer covers contributions, leveraged transactions, vesting, allocations, diversification, valuation, fiduciary duties, repurchase obligations, and concentration risk.

Stock options can align employees with share-price gains but may expire without value. This explainer covers grants, exercise price, vesting, intrinsic and time value, incentive and nonstatutory tax treatment, dilution, liquidity, and concentration.

RSUs are compensation awards that generally settle after time or performance conditions are satisfied. This explainer covers grant, vesting, settlement, tax withholding, dividends, private-company liquidity, dilution, forfeiture, and risk.

Network effects can strengthen platforms as users, sellers, developers, or data participation grows. This explainer covers direct and indirect effects, critical mass, multi-homing, congestion, compatibility, defensibility, and competition concerns.

Two-sided platforms serve groups that create value for one another, such as buyers and sellers. This explainer covers cross-group effects, price structure, chicken-and-egg launch problems, matching, governance, multi-homing, conflicts, and measurement.

Freemium uses a free product to acquire and engage users while paid plans unlock more value. This explainer covers free-tier boundaries, conversion, usage cost, retention, network effects, sales motion, unit economics, and misleading growth metrics.

Bundling can simplify buying, increase adoption, and monetize differences in customer demand. This explainer covers pure and mixed bundles, package discounts, attach rates, cannibalization, cost-to-serve, customer transparency, and antitrust risk.

Trade-secret protection can cover formulas, processes, data, designs, pricing, and know-how when secrecy creates value and reasonable safeguards exist. This explainer covers identification, access, contracts, departures, third parties, duration, and limits.

Free cash flow yield relates free cash flow to equity market capitalization or enterprise value. This explainer covers definitions, trailing and normalized cash flow, working capital, capital spending, cyclicality, leverage, and comparison limits.

Same-store or comparable-store sales isolate performance from an established store base. This explainer covers eligible locations, price, traffic, transactions, mix, online allocation, remodels, closures, calendar effects, and comparability limits.

Organic growth attempts to isolate change generated by the continuing business. This explainer covers price, volume, mix, currency, acquisitions, divestitures, calculation methods, margin and cash quality, and disclosure discipline.