Definitions

Short explanations of the terms used in this blog.

Basis point: One hundredth of one percent (0.01%). A cost of 50 basis points on $100 million is $500,000 a year. See Family Office, part 3.
Bottleneck (chokepoint): A step in a supply chain that everything else depends on. Whoever controls it has leverage over the rest. See Rockefeller, part 3.
Charter: A contract to hire a ship from its owner, for a single voyage or for a period of time.
Collateral: An asset or an income stream pledged to a lender to secure a loan. See Onassis, part 5.
Concentration risk: The risk of holding a large share of wealth in one company, asset, or industry. See Family Office, part 5.
Consolidation: Combining many companies in one industry into fewer, larger ones. See Rockefeller, part 4.
Cost per unit: Total cost divided by the number of units produced or moved, such as per gallon of oil or per ton of cargo. See Rockefeller, part 2.
Dilution: A fall in an existing shareholder's percentage ownership when a company issues new shares. See Onassis, part 4.
Drawback: In the railroad deals of the 1870s, a payment to a favored shipper on freight that other shippers sent. See Rockefeller, part 5.
Embedded family office: Family affairs handled inside the family's operating company, usually by its existing staff. See Family Office, part 2.
Family constitution: A written agreement on how a family makes decisions about its shared wealth and business, and how it settles disputes. See Family Office, part 5.
Family limited partnership: A partnership in which the parents, as general partners, keep control, while children or their trusts hold most of the economic value as limited partners. See Family Office, part 4.
Family office: A structure that manages the capital, investments, and legal matters of one or more wealthy families. See Family Office, part 1.
Flag of convenience: Registering a ship in a country other than the owner's, usually for lower fees, taxes, or crew costs. Panama and Liberia are common examples. See Onassis, part 2.
Holding company: A company that owns shares in other companies or assets instead of running a business itself. See Family Office, part 4.
Liberty ship: A standard cargo ship built in large numbers by the United States during World War II. Many were sold as surplus after the war.
Mergers and acquisitions (M&A): The buying, selling, and combining of companies.
Multi family office (MFO): A family office that serves several families and shares costs between them. See Family Office, part 2.
Private foundation: In civil-law countries such as Liechtenstein or Panama, a legal entity with no owners, only beneficiaries, run by a council. Unlike a trust, it owns its assets itself. See Family Office, part 4.
Private trust company (PTC): A company set up only to act as trustee for one family's trusts, with family members or trusted advisers on its board. See Family Office, part 4.
Rebate: A partial refund of a price, such as a railroad's refund to a large shipper. See Rockefeller, part 5.
Single family office (SFO): A family office that serves one family only. See Family Office, part 2.
Succession planning: A plan for how a business and family wealth pass to the next generation. See Family Office, part 5.
Supertanker: A very large oil tanker. In the 1950s, ships of 28,000 to 45,000 tons were considered very large. See Onassis, part 3.
Time charter and bareboat charter: In a time charter, the owner supplies the crew and operates the ship while the charterer decides where it goes, for an agreed period. In a bareboat charter, the charterer takes the ship without a crew and operates it.
Trust: A legal arrangement where one party holds assets for the benefit of others, often used for inheritance planning. See Family Office, part 4.
Vertical integration: Owning several stages of making and delivering a product, such as Rockefeller making his own barrels. See Rockefeller, part 2.
Virtual family office: A small office, often one or two people, that coordinates outside lawyers, accountants, and investment managers instead of employing a full team. See Family Office, part 2.