Venture capital, private equity and M&A glossary

An investment in an established company with good growth characteristics. The company is usually/can be in a growing industry and/or be a growing entity unto itself. The GP is given unlimited liability for the debts and obligations of the fund as well as the right to manage the fund. A company that offers its securities through an offering and now has those securities traded on the open market. A way for shareholders to vote for corporate directors and on other matters affecting the company without having to personally attend the meeting. Markets in which newly issued securities are sold to investors and the issuer receives the proceeds. The interest rates banks charge each other for short-term loans. LIBOR is frequently used as the base for resetting rates on floating-rate securities. Purchasing or owning shares of stock, with the expectation that the stock will rise in value. A group of people elected by shareholders to oversee the management of a corporation.
private equity glossary
In private equity, methods used include discounted cash flow, comparables and adjusted present value. Time-weighted A most misleading term as it actually means the exact opposite of what it suggests. Target MultiplesThe desired return on investment of private investors in early stage companies, defined in a multiple of the original investment. Succession PlanThe basis for transfer of business ownership from one generation of managers to the next, often with the assistance of private equity. Rule 144A provides that reoffers and resales in compliance with the rule are not “distributions” and that the reseller is therefore not an “underwriter” within the meaning of Section 2 of the 1933 Act. If the reseller is not the issuer or a dealer, it can rely on the exemption provided by Section 4 of the 1933 Act. If the reseller is a dealer, it can rely on the exemption provided by Section 4 of the 1933 Act. Regulation DRegulation D, is the rule (Reg. D is a “regulation” comprising a series of “rules”) that allow for the issuance and sale of securities to purchasers if they qualify as accredited investors. Pooled Investment Vehicle A legal entity that pools various investors’ capital and deploys it according to a specific investment strategy. Outstanding StockThe amount of common shares of a corporation which are in the hands of investors.

Purchase Fee

Angel investors and early-stage venture capital funds often provide seed money. Exits The means by which a private equity firm realizes a return on its investment. Private equity investors generally receive their principal returns via a capital gain on the sale or flotation of investments. Exit methods include a trade sale , flotation on a stock exchange , a share repurchase by the company or its management or a refinancing of the business . A Secondary purchase of the LP interest by another private equity firm is becoming an increasingly common phenomenon. Venture capital is a type of private equity where investors provide financing to startup companies and small businesses which they believe are positioned for long-term growth. As with other forms of private equity, venture capital firms have unique needs and need technology solutions designed specifically for their purposes.

  • An Open Ended Investment Company is a type of collective investment scheme and is a common structure for UK-Domiciled Funds.
  • Typically refers to commercial loans, but also can refer to direct lending to single family homeowners.
  • An agreement that is frequently required by early, or large, investors in a company.
  • “Equal footing” – describes situations where two or more assets, creditors, securities, or obligations are managed equally, without preference.
  • The period from when a fund is announced to the time when the final closing occurs.

This usually means that the company’s ownership is changing from being private to being public. Read more about reddit aion coin here. A stock is a security that represents an ownership interest—or equity—in a corporation. Equity holders of stock are often called “stockholders” or “shareholders.” Different classes of stock, such as common stock and preferred stock, have different voting and economic rights. More specifically, the Securities Act requires a company to file a registration statement containing information about itself, the securities it is offering, and the offering, unless the offering is an exempt offering. A liquidation preference is a right that an investor may have to be paid before other investors upon a liquidation event, such as the sale of the company. Preferred stockholders typically receive a liquidation preference over common stockholders.

Qualified Purchaser

Such concentration increases the overall risk profile of the fund as the price movement of a single stock in a concentrated portfolio may have a greater positive or negative effect on overall portfolio performance. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Any past performance figures shown are not indicative of future performance. Exchange rate may vary and cause the value of international investments to rise or fall. Tax reliefs referred to are those currently available and their value depends on the circumstances of the individual investor. Investment in any Fund mentioned herein should not be made without careful reference to the relevant prospectus. The information contained in these pages does not form part of any contract, nor can you rely on it for any contractual purpose. Leverage usually refers to a fund being exposed by more than 100% of its net asset value to assets or markets. The aim may be to take on more risk in order to generate higher returns, or it may actually be to reduce risk in the portfolio. It is achieved by combining derivatives with more traditional equity or bond investments.

Corporate venture capital (also known as “CVC”) occurs when an operating company invests in emerging companies. CVCs take may forms – some may be formal programs that are separate entities affiliated with an operating company, while other companies are making opportunistic investments. Bridge financing is money provided to a company by investors on a short-term basis until the company is able to raise its next round of capital. Bridge financings typically convert into the security issued in the next round of financing. Bridge financings are often structured as convertible debt or as Simple Agreements for Future Equity .

Distribution fund

The shareholders that are subject to lockup usually include the management and directors of the company, strategic partners and such large investors. These shareholders have typically invested prior to the IPO at a significantly lower price to that offered to the public and therefore stand to gain considerable profits. If a shareholder attempts to sell shares that are subject to lockup during the lockup period, the transfer agent will not permit the sale to be completed. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity. Capital for private equity is raised from retail and institutional investors, and can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet. The majority of private equity consists of institutional investors and accredited investors who can commit large sums of money for long periods of time.
private equity glossary
The report must be filed within 90 days after the end of the company’s fiscal year. Evergreen PromiseThis occurs when the company agrees to pay an employee’s salary for a number of years, regardless of when termination occurs, the day after he or she is employed or 10 years after. EquityOwnership interest in a company, usually in the form of stock or stock options. Early Stage FinancingCapital provided to a young or emerging company to facilitate its growth and development, as illustrated in Seed Financing and Start-up Financing. Divestiture FinancingCapital provided to a company to facilitate the sale of its interest in a product, division or subsidiary to another business entity. Chapter 7The part of the Bankruptcy Code that provides for liquidation of a company’s assets.

Secondary Market

Securities and Exchange CommissionThe SEC is an independent, nonpartisan, quasi-judicial regulatory agency that is responsible for administering the federal securities laws. These laws protect investors in securities markets and ensure that investors have access to all material information concerning publicly traded securities. Additionally, the SEC regulates firms that trade securities, people who provide investment advice, and investment companies. Pre-Money ValuationThe valuation of a company prior to a round of investment. Net IRRThe dollar-weighted internal rate of return, net of management fees and carried interest generated by an investment in the fund. The return considers the daily timing of all cash flows and cumulative fair stated value, as of the end of the reported period. Mezzanine FinancingRefers to the stage of venture financing for a company immediately prior to its IPO. Investors entering in this round have lower risk of loss than those investors who have invested in an earlier round. Mezzanine level financing can take the structure of preferred stock, convertible bonds or subordinated debt. General Partner ContributionThe amount of capital that the fund manager contributes to its own fund in the same way that a limited partner does.

This link should not be construed as either a recommendation or offer to by or sell any securities. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. A graph that plots the yields of similar quality bonds against their maturities. In a normal/upward sloping yield curve, longer maturity bond yields are higher than short-term bond yields. A yield curve can signal market expectations about a country’s economic direction. The average market capitalisation of a holding, weighted by the size of that position in a portfolio or index. The average time to expiry of leases across the portfolio weighted by contracted rental income.

Revenue Bond

Banks are cheaper and therefore much more risk averse than PE firms. So a PE firm might value your business at 12x EBITDA but the bank might only lend you 6xEBITDA. The gap in between those numbers in your deal structure is funded by permanent capital. A document written by you and your investment bank that explains your business and the investment opportunity to potential investors.

What is the full form of IME?

International Money Express (IME)

A security whose value and income payments are derived from, and collateralized by, a specified pool of underlying assets, such as loans, leases, credit cards, and royalties. The yield on distribution is the ratio of distributed income to the current market price. A certificate giving the holder the right to purchase shares or stock at a stipulated price within a specified time span, or in some cases, forever. A measure of the percentage of a fund switched within and into or out of a market sector. To be precise it is defined as the sum of purchases and sales divided by the mean value of the sector or market. A fund or subfund may be divided up into several tranches, i.e. with separate securities numbers, which differ from one another in one or a number of factors such as distribution practice, conditions, or fund currency.