An expression describing the act of a company using its own products for day-to-day operations. A company that eats its own dog food sends the message that it considers its own products the best on the market. This slang was popularized during the dotcom craze when some companies did not use their own products and thus could "not even eat their own dog food". An example would've been a software company that created operating systems but used its competitor's software on its corporate computers.
An adage that, referring to the risk/return trade-off, says that the type of security an investor chooses depends on whether he or she wants to eat well or sleep well. Investing in high-risk, high-reward securities will offer you the potential to eat well, but the risky nature of these securities might prevent you from sleeping at night. By contrast, investing safely means that you will sleep well, but the low rate of return may keep you from eating well.
A contractual provision stating that the seller of a business is to obtain additional future compensation based on the business achieving certain future financial goals. The financial goals are usually stated as a percentage of gross sales or earnings. Say an entrepreneur selling a business is asking $2,000,000 based on projected earnings, but the buyer is willing to pay only $1,000,000 based on historical performance. An earnout provision structures the deal so that the entrepreneur receives more than the buyer's offer only if the business achieves a certain level of earnings. The exact numbers would depend upon the business, but in this example a simplified provision might set the purchase price at $1,000,000 plus 5% of gross sales over the next three years. The earnout thereby helps eliminate uncertainty for the buyer.
A deposit made to a seller showing the buyer's good faith in a transaction. Often used in real estate transactions, earnest money allows the buyer additional time when seeking financing. Earnest money is typically held jointly by the seller and buyer in a trust or escrow account. An earnest money deposit shows the seller that a buyer is serious about purchasing a property. When the transaction is finalized, the funds are put toward the buyer's down payment. If the deal falls through, the buyer may not be able to reclaim the deposit. Typically, if the seller terminates the deal, the earnest money will be returned to the buyer. When the buyer is responsible for retracting the offer, the seller will usually be awarded the money.
Someone who is high up in a company due to unfair hiring practices, such as nepotism, and doesn't really do anything for the company. It could also refer to someone who makes themselves out to be much more able or important than they really are. Generally, the term is used to describe someone who is not particularly good at their job. Empty suits can be found in many large organizations. Incompetent employees who know how to work the system can climb into positions of authority that they really don't deserve or aren't able to maintain effectively. Some consider governmental positions to be commonly filled by empty suits that were appointed for political reasons.
The act of attempting to increase the size and scope of an individual or organization's power and influence. In the corporate world, this is seen when managers or executives are more concerned with expanding their business units, their staffing levels and the dollar value of assets under their control than they are with developing and implementing ways to benefit shareholders. Empire building is typically seen as unhealthy for a corporation, as managers will often become more concerned with acquiring greater resource control than with optimally allocating resources. Corporate controls imposed by a company's board and upper-level management are supposed to prevent empire building within a corporation's ranks. The failure to screen out empire builders can lead to corporate actions that do not necessarily provide the best growth opportunities for a corporation and its shareholders, such as acquisitions made to boost the control of the company's executives.
Investing in companies or projects that promote fair trade with producers in developing nations. Basic fair trade philosophies call for equal pay for suppliers of raw goods and materials as well as respect for strong environmental practices and a focus on the trading relationships between advanced economies and developing nations. Fair trade investing mainly deals with trade in agricultural products, such as coffee, sugar and textiles. Many of the growers of these products are low-income workers who are often marginalized in trade agreements and receive few subsidies from their home governments. Fair trade practices aim to help these workers gain a higher standard of living and financial independence, while the companies who actively promote fair trade can show transparency in their business dealings and gain valuable image points with shareholders.
Provision introduced in 2002, under Section 308(a) of the Sarbanes-Oxley Act. Fair Funds for Investors was put into place to benefit those investors who have lost money because of the illegal or unethical activities of individuals or companies that violate securities regulations. Essentially, this provision enabled the Securities and Exchange Commission (SEC) to add civil money penalties to disgorgement funds for the relief of the victims of stock swindles. The SEC anticipates that fair funds will play an important role in encouraging investors to continue to place trust in U.S. stock markets. Fair funds are playing an increasing role in the SEC's enforcement of regulations, and they are particularly favored when investors who have lost money can be identified and their financial losses can be calculated. So far, however, these funds have paid out little of their value.