Business & Finance Glossary: H
9 terms starting with H, from a glossary of 656 definitions covering intangible assets, valuations, and key financial concepts.
Headcount Efficiency
A productivity metric that evaluates the output, revenue, or value generated relative to the number of employees. Headcount efficiency is a key performance indicator for scaling businesses and investors, revealing whether growth in intangible assets such as technology and process automation is translating into leverage across the workforce.
Read more →Heads of Terms
Heads of terms (also called a letter of intent or memorandum of understanding) is the short document that records the main commercial terms a buyer and seller have agreed in principle before formal contracts are drafted. It typically covers the headline price, the deal structure (a share sale or an asset sale), any earn-out, the conditions to completion, and an exclusivity period during which the seller agrees not to talk to other buyers. In the UK, most of a heads of terms document is deliberately non-binding — it sets direction rather than creating a contract — but certain clauses, notably exclusivity, confidentiality and costs, are usually stated to be binding. Signing heads of terms is the point at which a deal becomes real: it frames the due diligence that follows and the sale and purchase agreement that ultimately completes it.
Read more →Herfindahl-Hirschman Index (HHI)
A measure of market concentration calculated by summing the squares of each firm's market share within an industry. HHI is used by regulators and investors to assess competitive dynamics and is relevant to intangible asset valuation because highly concentrated markets often support stronger pricing power and brand premiums.
Read more →Historical Financial Information
Historical financial information is the past-period financial record a company includes in a prospectus or an AIM admission document when it seeks admission to a public market. It normally covers the last three financial years, or the period since incorporation if that is shorter, and it is either audited or reported on, so that investors can rely on the track record behind the offer. The framework matters as much as the period. The information is prepared on the basis the company will use in its next annual accounts: for a Main Market prospectus that means UK-adopted IFRS, while a UK-incorporated AIM company may present it under IFRS or FRS 102 since the AIM Rules changes of August 2026. A reporting accountant typically reports on the historical financial information, or the company's audited accounts are included in the document instead. Worked example: a UK group that has always filed FRS 102 accounts and plans a Main Market listing presents its track record under UK-adopted IFRS, which means restating its earlier years on the IFRS basis and becoming a first-time adopter under IFRS 1. The same group joining AIM could, since August 2026, present that record under FRS 102 or IFRS. Where the framework does change, balances such as development costs may be measured differently from the filed accounts, and the evidence for each adjustment needs to exist for the earliest year shown rather than being reconstructed during the transaction. Contrast: historical financial information looks backwards and is audited or reported on, whereas the working capital statement in the same document looks forward and is supported by a separate working capital report from the reporting accountant.
Read more →Holding Period
The duration for which an investor retains an investment before exit, typically measured from the date of initial acquisition to the date of sale or IPO. In private equity and venture capital, holding periods typically range from three to seven years and influence the internal rate of return calculation.
Read more →Human Capital
The economic value of a workforce's collective experience, skills, knowledge, creativity, and health. Investment in human capital through recruitment, training, development, and retention is a key intangible asset category and a primary driver of productivity growth.
Read more →Human Capital Accounting
A set of methods for measuring and reporting the economic value of an organisation's workforce, including recruitment costs, training investment, experience, and productivity contributions. Human capital accounting seeks to address the gap between traditional financial reporting and the true value that people create within knowledge-intensive enterprises.
Read more →Human Capital Return on Investment (HCROI)
A metric that measures the financial return generated per unit of human capital expenditure, typically calculated as adjusted profit divided by total compensation and benefits costs. HCROI enables firms and investors to evaluate workforce productivity and benchmark the efficiency of human capital deployment across organisations.
Read more →Hurdle Rate
The minimum rate of return that a fund must achieve before the general partner becomes entitled to carried interest, or the minimum acceptable return for an investment decision. Hurdle rates are typically set between 6% and 8% in PE/VC fund structures and serve as a performance benchmark that aligns manager and investor incentives.
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