The Ultimate Glossary of Terms for Dealmakers

The SRRI measures the volatility of the fund over a year and returns a score of between 1 and 7. Also referred to as equities, shares, equity securities or corporate stock. Instruments that signify an ownership position, or equity, in a corporation. An investment instrument, other than an insurance policy or fixed annuity, issued by a corporation, government or other organisation which issues debt or equity. Preference shares are shares issued by companies in a similar way to ordinary shares. These are investments such as bank deposits, certificates of deposit, commercial paper, treasury bills, and floating rate notes. Money markets are global markets dealing in lending and borrowing on a short-term basis.

Appendices and glossary – GOV.UK

Appendices and glossary.

Posted: Fri, 22 Oct 2021 07:00:00 GMT [source]

A situation where the risk of an investment is proportionality greater or less than the potential gain. A comprehensive report intended to provide information about a company’s activities and financial performance throughout the preceding year. Bank representing shares in a foreign company that trades on a U.S exchange. “Traction” is evidence of having found your product-market fit. Traction can be generated before you’ve built a thing – using Smoke Tests for example – but is more commonly demonstrated using metrics such a sign-ups, repeat use, paid-for subscriptions and renewals. Timeboxing is an approach to task and time management that sets rigid constraints on how long a given task or project can take to complete.

Equity funds

Read more about btc a dolares here. Emerging markets or developing markets – mainly in Asia, Eastern Europe and Latin America – that are growing quickly, but whose economies and stock markets have not yet reached Western standards. The share of a company’s net profit distributed on equities, participation certificates, cooperative shares or dividend-right certificates. The distribution of income generated by the fund to the unit holders. In addition to traditional financial analysis, SRI company analysis also looks for the companies in selected industries that best meet environmental and social criteria (the best-in-class principle). The net assets of a fund divided by the number of units in circulation. A company that has sufficient cash to maintain its operations without major constraints. The proportion, usually expressed as a percentage, of a property or property portfolio that is without a tenant. How much the returns of each variable differ from the average return of the benchmark. The difference in the yield of a corporate bond over that of an equivalent government bond. Bonds issued by governments and can be either local-currency-denominated or denominated in a foreign currency.
private equity glossary
For example, when private funds raise money from investors through exempt offerings, they are subject to state and federal securities laws. In addition, persons who manage private funds may be required to register as an investment adviser with the SEC or applicable state securities regulators unless they are exempt from applicable registration requirements . The Investment Company Act—often referred to as the before ’40 Act—regulates investment companies. The Investment Company Act focuses on public disclosure about pooled investment vehicles and their entity investment objectives, as well as on investment company structure and operations. The legal entity venture capital firms create to pool investor money and invest in companies with growth potential.

The Ultimate Glossary of Terms for Dealmakers

Hurdle Rate The minimum required rate of return on an investment based on cost of capital, returns for similar investments, risk and others. Typically, this is the rate of return that the general partners must achieve to investors before they can collect carried interest. The total value to paid-in is also known as the investment multiple. TVPI is calculated by dividing the fund’s cumulative distributions and residual value by the paid-in capital. It gives a potential investor insight into the fund’s performance by showing the fund’s total value as a multiple of its cost basis. „Strategy shift“ occurs when a private equity fund manager strays from the fund’s stated strategy. The term „pro rata“ is often used in venture capital financings where the the investor has the right to participate in a future financing round so they can maintain their ownership interest in the company. For example, let’s say you own 20% of a company and have the right to participate in future company financings to maintain your pro rata ownership percentage in the company.

  • The right of an investor to sell shares, if a founder or other key employee sells shares.
  • An investment fund which distributes the income generated to its unit holders.
  • Collective Investment Scheme Sometimes referred to as a ‚pooled investment‘, it is a scheme where a fund manager will invest the pooled money in one or more types of asset, such as stocks, bonds or property.
  • For example, the upside deviation of returns is calculated as the standard deviation of returns that are smaller than the mean.
  • The difference between the two prices is known as the “spread”.
  • A period of time that must elapse before the holder of a specific security can transfer or sell the security.

Enterprise value / Valuation – The estimated total worth of 100% of a company’s equity. For example, if a company is valued at 4.5X EBITDA of this year, and this year’s EBITDA is $8M, the valuation would be $36M. Revenue- Inflows of economic resources, typically in the form of Sales from day-to-day operations, Gains from asset increases, or Investment Income such an interest and dividends. Anchor investor – The largest check in a transaction is called the ‚anchor check‘ as it secures a bulk or critical mass of the funding needed. Once an anchor check is secured, the likelihood of a transaction successfully closing increases. Buyout – Purchasing the majority of a company’s equity, changing control to the buyer. Often coupled with the addition of new operational talent to the company’s management team. The customers, suppliers, inventories and other assets and liabilities required for day-to-day operations of a target company. The difference between the post-valuation of a company’s previous VC round and the pre-money valuation of its new round. A pre-arranged financing package offered to potential acquirers that includes all the details of a lending package.

GatekeeperSpecialist advisers who assist institutional investors in their private equity allocation decisions. Institutional investors with little experience of the asset class or those with limited resources often use them to help manage their private equity allocation. Gatekeepers usually offer tailored services according to their clients‘ needs, including private equity fund sourcing and due diligence through to complete discretionary mandates. A professional advisor or intermediary operating in the private equity market on behalf of clients, such as institutional investors. Distressed debtCorporate bonds of companies that have either filed for bankruptcy or appear likely to do so in the near future.

What does COB mean in business?

COB stands for “close of business.” It refers to the end of a business day and the close of the financial markets in New York City, which define U.S. business hours. It's used in business communications to set a deadline for a task to be completed by 5:00 PM Eastern Standard Time (EST).

A prospectus must be filed with the SEC and be given to all potential investors. These securities, commonly in the form of Treasury bonds, corporate bonds, CDs and preferred stock, provide periodic income payments at predictable intervals and an interest or dividend rate known in advance by the holder. The relatively low risk of fixed income securities generally translates into relatively lower returns. An event that could result in either investors or debt holders to receive cash from the company, either through acquisition or a sale of assets resulting from bankruptcy. In either case, preference clauses determine order of payout to claimants, typically valuing debt holders and preferred shareholders over common stockholders. Co-investment programAn investment partnership or insurance company separate account that enables two or more pension funds to co-invest their capital in a single property or portfolio of properties. Portfolio monitoring is the process of tracking the operational performances of portfolio companies.

Cash flow

Alternative investments include property, hedge funds, commodities, private equity and infrastructure. General partners manage funds for private equity firms, from determining the size of the fund to choosing which companies to invest in. Companies typically raise money from investors in a series of funding rounds in which investors, often including venture capital funds, provide money in exchange for preferred stock. Institutional investors such as insurance companies, pension funds, and mutual funds make up a large portion of private equity limited partners. Instead, PE investors seek solid and stable businesses with diversified customer bases, strong cash flows, and more reliable returns. A typical investment has a holding period of 4-7 years and aims to generate investor returns in the range of 20-40% annual IRR. An investor in a limited partnership, i.e. a private equity fund. IRR Internal rate of return is a metric commonly used to evaluate the returns on an illiquid investment.

A security representing ownership, typically listed on a stock exchange. ‘Equities’ as an asset class means investments in shares, as opposed to, for instance, bonds. To have ‘equity’ in a company means to hold shares in that company and therefore have part ownership. An investment that is not included among the traditional asset classes of equities, bonds or cash.

For example, if a stock’s beta is 1.2, it’s theoretically 20% more volatile than the market. Conversely, the majority of high-tech, typically Nasdaq-based stocks have a beta of greater than 1. Stocks with a beat of greater than 1 are believed to offer the possibility of a higher rate of return, but also require the investor to assume higher risk. Private equity refers to taking an equity or ownership interest into a company or asset that is privately held. While the private markets are significantly smaller than the stock market, the growth of private equity is significantly greater than that of the stock market. This growth has left many fund managers struggling to manage their portfolio on outdated infrastructure and legacy technology. Allvue’s complete suite of private equity solutions help funds grow and scale successfully, by offering an integrated solution that can address all of a GP’s needs, from back office to investor relations to deal tracking.
The term „investment period“ when applied to a private equity fund can have two different meanings. First, the investment period is the time during which the fund will make investments in new opportunities. Most venture and buyout funds usually make all initial investments in a 2-3 year time frame, after which it will make follow-on investments and raise their next fund. This investment period is part of the fund’s investment strategy. The most well-known private equity firms, such as Kolberg Kravis and Roberts and Blackstone, operate by buying all of the shares of a company listed on a public stock exchange (such as the New York Stock Exchange ). Since it now owns the corporation, the private equity firm then brings in a new management team, in an attempt to make the newly purchased company more profitable and thus more valuable. Ultimately, the private equity group resells the company later, hopefully for a higher price per share than the one for which it was originally acquired on the public market. Private Equity Real EstateOne of the four quadrants of the real estate capital markets.

What is DPI vs TVPI?

TVPI vs.

Two other metrics may come up when discussing TVPI: DPI (distributions to paid-in capital) and RVPI (residual value to paid-in capital). TVPI is actually the sum of these two numbers—accounting for both realized returns (distributions) and unrealized returns (residual value).

A pooled fund established under trust in which investors can buy and sell units on an ongoing basis. Socially responsible investments include those investments which take into account social and environmental criteria in addition to traditional financial factors. Shares of companies with a market capitalisation of generally less than CHF 500 million. An investment with no chance of default, and a known or certain rate of return. Identifying and quantifying risk, then taking appropriate action to make sure risk remains within acceptable levels. Sophisticated systems and statistical models are required to measure and manage risk, and appropriate expertise to interpret and use the results. With good risk management, an effective balance between risk and returns can be achieved. When existing shareholders are given rights to purchase the new shares in proportion to their existing holding. The continuous reinvestment of the income generated by a fund in the same fund.
They are also known as stock- purchase warrants and subscription warrants. Rule 504Company can raise up to $1 million in any 12-month period from any number or investors provided that the company does not advertise the sale. There are restrictions on the resale of the securities, but there is no requirement of disclosure. Investors need not to be sophisticated nor is any formal private offering memorandum required. However, offering is subject to the general antifraud provisions of the federal securities laws requiring that all material information be accurately presented to purchasers. Rights OfferingIssuance of „rights“ to current shareholders allowing them to purchase additional shares, usually at a discount to market price. Shareholders who do not exercise these rights are usually diluted by the offering. Rights are often transferable, allowing the holder to sell them on the open market to others who may wish to exercise them. Rights offerings are particularly common to closed-end funds, which cannot otherwise issue additional ordinary shares. Partnership AgreementThe contract that specifies the compensation and conditions governing the relationship between investors (LP’s) and the venture capitalists (GP’s) for the duration of a private equity fund’s life.

Any mandatory association of brokers and dealers in the over the counter securities business. Created by the Maloney Act of 1938, an amendment to the Securities Act of 1934. Investment MultipleCalculation performed by adding the reported value and the distributions received and subsequently dividing that amount by the total capital contributed. Investment BankersRepresentatives of financial institutions engaged in the issue of new securities, including management and underwriting of issues as well as securities trading and distribution. Information RightsRights granting access to company’s information, i.e. inspecting the company books and receiving financial statements, budgets and executive summaries. Fund AgeThe age of a fund from its first takedown to the time an IRR is calculated. Form S-1The form can be used to register securities for which no other form is authorized or prescribed, except securities of foreign governments or political sub-divisions thereof. Form 10-KThis is the annual report that most reporting companies file with the Commission. It provides a comprehensive overview of the registrant’s business.
private equity glossary
Loans and borrowings relating to debtors experiencing financial or operational distress, default, or bankruptcy. Accounting concept relating to a company’s liquidity and presenting a balance of all income and expenditures. Unsecured debt.Unsecured debt is debt that is not secured by collateral owned by the company. Debt that is secured has priority in payments over unsecured debt in the event of the borrower’s bankruptcy. A „pitch“ is the presentation made to persuade an investor to invest in the proposal. One type of pitch is the „elevator pitch“ which is a very short verbal presentation, that should take no longer than the time one would have with an investor on an elevator ride.
If in six months, the company goes bankrupt, and the equity holders receive nothing, the venture capital fund will write-off its investment. Write-offs are common occurrences in early-stage venture capital. A „turnaround“ is the process of making strategic, financial and operational changes to a troubled company in order to reverse its decline and make it profitable. The company may be distressed or it may be in formal bankruptcy proceedings. „Registration“ is the process a company goes through to be able to sell shares of its stock in the public markets. Securities and Exchange Commission („SEC“) covering shares of its stock, and when the SEC approves the registration, these shares can be sold on a stock exchange such as the New York Stock Exchange or NASDAQ. A „priced round“ is a financing round where the investors and the company agree to a valuation for the company as part of the financing. Priced rounds typically involve the issuance of common or preferred stock.
Due DiligenceA process undertaken by potential investors — individuals or institutions — to analyze and assess the desirability, value, and potential of an investment opportunity. The process of assessing the business and financial viability of a potential investment target, as well as the potential terms and conditions of an investment agreement. Dollar-weighted A misleading term when compared with time-weighted returns. Simply the calculation of the IRR of a series of fund cashflows, i.e., the compound return over time. THis is the classic measure of private equity returns, and is to be comended. Great care should be taken not to confuse this measure with time-weighted returns which, contrary to first impressions, actually means something completely different .

Typical items on a product backlog include user stories, changes to existing functionality, and bug fixes. B2C means you offer your products or services to other consumers . For example, when a company sells to another company through a third-party company. This is problematic because the term ‘real proof’ is subjective.

Core CPI or inflation is a measure of long-run inflation and excludes transitory/volatile items such as food and energy. A portfolio with a low number of holdings or with high weightings to its largest holdings. Spending on fixed assets such as buildings, machinery, equipment and vehicles in order to increase the capacity or efficiency of a company. A financial market in which the prices of securities are rising, especially over a long time. A financial market in which the prices of securities are falling. A generally accepted definition is a fall of 20% or more in an index over at least a two-month period. Arbitrage refers to the practice of simultaneously buying and selling identical financial instruments in different markets in order to profit from a difference in price. A term coined by John Maynard Keynes to refer to the emotional mindsets of investors and consumers, where confidence, or lack of it, can drive or hamper economic growth.
ETFs trade like an equity on a stock exchange and experience price changes as the underlying assets move up and down in price. ETFs typically have higher daily liquidity and lower fees than actively managed funds. The income received on an investment relative to its price, expressed as a percentage. It enables comparisons of the level of income provided by different investments such as equities, bonds, cash or property, or between funds at a point in time. Measures an investment’s annual growth rate over time, including the effect of compounding. CAGR is typically used to measure and compare the past performance of investments or to project their expected future returns. Screening allows investors to find companies that are likely to perform well based on various factors, such as their market capitalization, earnings per share, and price-to-sales ratio. An initial public offering is a process that occurs when a private company sells shares to the public.

A flurry of PE fundraising activity; tech soaked up VC funding in November – S&P Global

A flurry of PE fundraising activity; tech soaked up VC funding in November.

Posted: Fri, 17 Dec 2021 08:00:00 GMT [source]

Prepayment rightsRights given to the borrower to make partial or full payment of the total principal balance prior to the maturity date without penalty. Performance bondA surety bond posted by a contractor guaranteeing full performance of a contract with the proceeds to be used to complete the contract or compensate for the owner’s loss in the event of nonperformance. Pension liabilityThe total amount of capital required to fund vested pension fund benefits. OverallotmentA practice through which underwriters offer and sell more shares than they have agreed to buy from the issuer.
When triggered, the clawback will require that the general partner return to the fund’s limited partners an amount equal to what is determined to be „excess“ distributions. Chinese wallA barrier against information flows between different divisions or operating groups within banks and securities firms. Examples include a policy barrier between the trust department from making investment decisions based on any substantive inside information that may come into the possession of other bank departments. The term also refers to barriers against information flows between corporate finance and equity research and trading operations. Carried InterestA bonus entitlement accruing to an investment fund’s management company.

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