OFEX

OFEX is a market providing a share-trading platform for unlisted and unquoted securities, off-exchange. The OFEX market is operated in the UK by OFEX plc.

Offer

In the context of an acquisition, the offer (or bid) made for the target company by the Newco offeror established by the private equity provider and the participating directors of the target company (those directors who are part of the management buyout team).

Offer Document

In the context of an acquisition, the document by which the offeror makes the formal legal offer to target shareholders.

Offer Period

In the context of an acquisition, the period from announcement of an offer or potential offer until the closing date for the offer or the date when the offer becomes or is declared unconditional as to acceptances (that is, the acceptance condition which requires a certain percentage of shareholders to accept, has been satisfied) or the offer lapses.

Offering Circular

A term frequently used interchangeably for a prospectus or offering memorandum.

Offeror

In the context of an acquisition, the Newco entity established to make the offer for the target company.

Official List

The main market of the London Stock Exchange. Also referred to as the ‘Full List.’

OID

See ‘Original Issue Discount.’

OMX

Stock exchange operator created in 2003 and which includes stock exchanges in Copenhagen (DK), Stockholm (SE), Helsinki (FI), Tallinn (EE), Riga (LV) and Vilnius (LT).

Open Offer

In the UK, an offer of securities, not being by way of a rights issue, to existing shareholders of an issuer.

Open Order

An order by a customer to a broker/dealer to buy or sell a security that remains in effect until either executed or cancelled by the customer.

Open-end Fund

A fund which sells as many shares as investors demand. Compare with ‘Closed-end Fund’ and ‘Mutual Fund.’

Opening Price

The price at which a security trades at the beginning of a day or, in the case of an initial offering, at the commencement of its first day of trading.

Operating Ratio

A company’s operating expenses divided by its operating revenues, or, more generally, any of a number of ratios measuring a company’s operating efficiency, such as sales to cost of goods sold, net profits to gross income, operating expenses to operating income, and net profit to net worth.

Option

A contractual right to purchase or sell something (such as stock) at a future time or within a specified period at a specified price.

Option Pool

The number of shares set aside to be issued to employees of a private company.

Optionee

The holder of an option.

Order

An offer to buy or sell a tradable instrument with a variety of conditions attached.

Order Book

An automatic execution facility operated by the London Stock Exchange. Order Books facilitate the trading of Order Book securities.

Order Book Security

A security that is admitted to trading on the Order Book.

Ordinary Shares

(UK) The most common form of share. Holders may receive dividends in line with the company’s profitability and recommendation of its directors.

Organizational Chart

A graphic representation of how authority and responsibility is distributed within a company or other organization.

Organizational Meeting

In the public offering process, the first meeting after the underwriter or underwriters have been selected, attended by representatives of the issuer, underwriters, their respective lawyers and the issuer’s accountants. The initial portion of the meeting is typically spent reviewing the timetable for the proposed public offering, with the remainder being used to familiarize the underwriters and their lawyers with the company’s business.

Original Issue Discount (OID)

A discount from par value of a bond or debt-like instrument. In structuring a private equity transaction, the use of a preferred stock with liquidation preference or other clauses that guarantee a fixed payment in the future can potentially create adverse tax consequences. The IRS views this cash flow stream as, in essence, a zero coupon bond upon which tax payments are due yearly based on “phantom income” imputed from the difference between the original investment and “guaranteed” eventual payout. Although complex, the solution is to include enough clauses in the investments agreements to create the possibility of a material change in the cash flows of owners of the preferred stock under different scenarios of events such as a buyout, dissolution or IPO.

OTC Bulletin Board (or Nasdaq Bulletin Board)

A regulated electronic trading service offered by the National Association of Securities Dealers (NASD) that shows real-time quotes, last-sale prices and volume information for over-the-counter (OTC) equity securities. Companies listed on this exchange are required to file current financial statements with the SEC or a banking or insurance regulator. There are no listing requirements, such as those found on the Nasdaq and New York Stock Exchange, for a company to start trading on the OTCBB. It is important to note that companies listed on the OTCBB are not a part of the Nasdaq Exchange. Stock that trade on the OTCBB, will have the suffix ".OB."

Out-of-the-Money Option

An option is Out-of-the-Money if the strike price of the option is higher than the market price of the underlying security or commodity.

Outside Director

See ‘Independent or Outside Director.’

Outstanding Stock

The shares of a corporation’s stock that have been issued and are in the hands of the public. Also called ‘Shares Outstanding.’

Over-Allotment Option

The option granted to an underwriter in a public offering giving it the option, for a period of anywhere from 15 to 45 days (usually 30 days) after the effective date, to purchase additional securities from the issuer (usually up to 15% of the shares being sold) at the initial price to the public, for the purpose of covering over-subscriptions for the securities. See ‘Green Shoe.’

Overhang

A large number of securities that may be released into the market, putting downward pressure on the trading price of the shares. In connection with a stock offering, underwriters try to minimize the amount of overhang to promote confidence in the price at which the shares are initially offered to the market. Also known as ‘Market Overhang.’

Oversubscription

Occurs when demand for shares exceeds the supply or number of shares offered for sale. As a result, the underwriters or investment bankers must allocate the shares among investors. In private placements, this occurs when a deal is in great demand because of the company’s growth prospects.

Over-the-Counter (OTC)

A security that is not traded on an exchange, usually due to an inability to meet listing requirements. For such securities, broker/dealers negotiate directly with one another over computer networks and by phone. Also called ‘Unlisted.’ Also, the computer and phone system through which over-the-counter (as well as listed) securities are traded. See ‘OTC Bulletin Board.’