Venture capital, private equity and M&A glossary

This includes in particular a description of the investment strategy, the fund manager, the risk management and the legal and tax risks. In the English-speaking world, the term is often used as synonymous with fund manager. A “write-up” is when the carrying value of an investment is increased. A “write-off” is when the carrying value of an investment is reduced to zero. For example, if a venture capital fund invests $5 million in an early-stage company, at the time of investment, it will value that investment at $5 million.

Read more about eth converter usd here. Dollar stopAn agreed dollar amount of taxes and operating expense each tenant will pay on a prorated basis. Discount rateA yield rate used to convert future payments or receipts into present value. DepreciationA decrease or loss in property value due to wear, age or other cause. In accounting, depreciation is a periodic allowance made for this real or implied loss. Demising wallThe partition wall that separates one tenant’s space from another or from the building’s common areas. Defined-benefit planAn employee’s benefits are defined, either as a fixed amount or a percentage of the beneficiary’s salary at the time of retirement.

Private Equity Resources

The name comes from the fact that the financing details are stapled to the back of the acquisition term sheet. A fee paid by the buyer if it breaches or decides to terminate a definitive acquisition agreement. An analysis of a target company that accounts for all one-off or non-recurring items to determine how working capital normally operates. A pact between the parties involved in a deal that confirms they will not misuse the information exchanged during negotiations. The initial document that outlines the goals of the parties involved in a deal and is drafted to open negotiations under clauses dictating exclusivity and secrecy. The basic elements of a deal spelled out more specifically in a share purchase agreement.

Equity — Equity represents ownership in a company and is usually represented by common shares and preferred shares. Employee Stock Option Plan or Stock Ownership Plan — a plan established by a company to let certain employees benefit strongly from the increase in value of the company. Under an ESOP, certain employees have a right to buy shares in the company at a predetermined price within a specified period of time . Under a Stock Ownership Plan, employees are not granted options, but buy shares at once.

Financial conduct authority FCA

A ground rent is created when a freehold piece of land or a building is sold on a long lease. The individual leases provide an annual payment, known as ground rent, to the freeholder. Ground rents have pre-defined payment terms that often include a periodic increase in-line with inflation. The annual gross dividends as a percentage of the current share price. It is a way of indicating the level of income an investor will receive.

Investing borrowed capital to expand assets and amplify returns. Investors use debt to maximize buying power while companies often use debt as it has a cheaper cost of capital than equity. An intermediary between an issuer of debt or equity and the investors. Investment banks value, underwrite, facilitate mergers and acquisitions, help with the IPOs and other corporate finance topics. The attractiveness of an investment to investors based on qualities that are likely to reduce risk and maximize value.

An investor questionnaire, which establishes an investor’s suitability and qualification to invest in the transaction, is typically included or integrated with the subscription agreement. A fund that is organized in a different structure, such as a limited liability company, has a managing member or other manager under applicable state law and governing documents of the fund instead of a general partner. An investment in non-public securities of, typically, private companies. Also an investment asset class typically reserved for large institutional investors such as pension funds and endowments as well as high net worth individuals. Includes investments in privately-held companies ranging from start-up companies to well-established and profitable companies to bankrupt or near bankrupt companies. Examples of private equity include venture capital, leveraged buyout, growth capital and distressed investments. Moonfare does not make investment recommendations and no communication, through this website or otherwise should be construed as a recommendation of any security.

Max The highest value of the performance measures of all the funds/deals in a selected universe. Min The lowest value of the performance measures of all the funds/deals in a selected universe. CAPEX Capital expenditure is the value of purchases of fixed assets such as property, industrial plants and equipment to support a firm’s new projects or expansion. A senior form of equity that provides shareholders with certain preferential rights relative to common equity shareholders. Net invested capital consists of contributed capital, minus capital returned from exits and any write-downs of investment value. An agreement addressed by a PE fund in an LBO to its acquisition vehicle, which provides a limited guarantee for the equity financing detailed in an SPA. Securing these letters is often required for the PE fund to enter into an SPA and to satisfy buyer financing reps and warranties. In some instances, the PE firm may directly provide a limited guarantee on the equity component of the transaction. A company’s total value—calculated as the equity value plus net debt.

Market Capitalization

A higher Sharpe Ratio is better when compare to similar portfolios with lower return as it shows a higher risk-adjusted return. Risk Free Rate EU The rate at which the largest banks operating in the European Union lend money to each other — also known as the “Euro Interbank Offered Rate” or “EURIBOR”. Treasury bill, it is an essentially risk-free rate of return that allows investors to evaluate the return of investments given the additional risk. Net A net value means that it is being presented after all relevant deductions.

The cash generated by a business on a pre-tax, pre-interest basis after making positive adjustments for non-cash expenses such as depreciation and amortization as well as owner-related benefits. Research and analysis of a company or organization done before a contract or definitive agreement is signed. Often includes a detailed review of accounting history and practices, operating practices, customer and supplier references, management references and market reviews. This section contains all information for shareholders, including our financial reports, regulatory news and key performance indicators. IOI – An Indication of Interest is the non-binding letter a Sponsor sends a target company to express interest in exploring an investment into or full buyout of the target. If an IOI is favorably received by the target’s owners, it marks the beginning of the deal-making process. Waterfall – The tiered structure of payments, as profits are apportioned at first preference, then flow down to the next tier and on.

Management Fee

The payments are typically made up of a fixed sum and an incentive based fee for achieving specified results. Treasury obligations were paying 30 percent, rather than just a smidgen above zero, it is doubtful that any sane person would invest in anything else, never mind something as volatile as stocks. The risk premium is the difference between the expected return on your investment, and the return you would get if your principal were guaranteed. ESG may be referred to as “ESG investments” or “Responsible investing.” A form of Antidilution Protection that adjusts the Conversion Ratio according to a formula that takes into account both the lower price and the number of shares issued at the lower price.

What is the full form of RMB?

The renminbi is the official currency of the People's Republic of China, and translates to “people's money.” Its international symbol is CNY (or CNH in Hong Kong; but abbreviated RMB, with the symbol ¥).

This ratio gives the private equity investor an idea as to how much of the return was “unrealized”. Recovery Rate Recovery rate is the ratio of the total value over invested capital for defaulted investments . This is a key measure of manager discipline since all managers are likely to lose money on some deals, but some managers will have tighter covenants or work out teams that are able to recover more value on the investments. Calculated as total distributions plus valuation for those deals have TVPI below 1 then divided by total contributions for those deals have TVPI below 1.
private equity glossary

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