Virtually every industry has their own vernacular, although some words and phrases no doubt cut across sectors. The language of finance can be particularly nuanced though because different firms and investors often have such distinct objectives. There has been some crossover lately between areas like venture capital and private equity, so folks working in one or the other will likely encounter some similar concepts and terms in both. Of course, the economic climate, the stock market, and other  investor trends influence which ideas are thrown about more than others at any given time. Granted, many of the words are well known regardless of the frequency of their usage during a particular period of time, but they sometimes take on additional meanings. Here are 5 of the top buzzwords currently circulating the finance world:


This word has always been a business favorite, but with the explosion of startups skyrocketing to billion dollar valuations, the notion of scalability seems to have become more important than ever. Fundraising has always been fairly difficult, and with the level of competition always on the rise, being scalable is an absolute necessity for any business seeking hefty infusions of capital. Any business model that is not scalable is going to be a tough sell, and even if a company has not put that much thought into when and how it would scale, investors will definitely be thinking about it when evaluating a business.


This is one of those great words that can be used in various situations. Obviously, companies have to know how to leverage their assets and it is never wise to be over leveraged. Of course, companies must also know how to leverage their networks, partnerships, and opportunities. More than likely, any investor is going to be interested in seeing how a company goes about taking full advantage of the resources it has at its disposal, especially if those resources are initially limited in scope.


There was a time that people generally preferred to stick with what they knew, and there are still some investment firms that subscribe to this principle. There is safety in familiarity and when forking over substantial sums of money, uncertainty is often understandably unwelcome. But, as plenty of people have heard, the key to a successful portfolio usually centers on a healthy amount of diversification. It is obviously foolish to put all of one's eggs into one basket because if that one sector succumbs to upheaval, it can be incredibly difficult to recover. Thus, it is neither necessary nor recommended to remain in one particular industry, and it is wise to consider at least putting stakes into several subsets of that industry.


Fragmentation is often a huge obstacle for large companies involved in various product and service delivery lines. Although many businesses want there to be communication among departments and personnel, the realities of running a big enterprise can make that rather tricky. Companies intending to pursue fundraising or a sale must have a strategy to overcome this all too common problem. It is obviously such a hot topic because it is such a hindrance to effective governance.


The use of this word has become so commonplace in business that some people find it obnoxious. In some ways, it is almost a direct contrast to fragmentation, as it should be the solution to the issue. There is so much emphasis on finding synergy among company departments and operations, and virtually all other aspects of the business climate. It clearly makes sense to want to maximize effectiveness and productivity and to combine forces where appropriate. If a company is unable to find that synergy, it could be construed as a sign of dysfunction and may deter prospective investors. Of course, the target companies aren't the only ones expected to strike this balance, as the investment firms themselves will no doubt be striving for synergy.

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