Venture capital, private equity and M&A glossary

Mezzanine financing is debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders. This term comprises strategies which, depending on the situation, invest in a large number of financial instruments, sectors and markets, according to the opportunities available to the managers. Macro hedge funds follow a trading-opportunistic strategy and attempt to identify and exploit global profit opportunities using macro-economic analysis. Due to the variety of strategies used, the correlations to the markets are also different. For non-Treasury credit securities, the yield is equal to the Treasury yield plus a spread to the Treasury yield curve to compensate for additional credit risk. The price of a bond with credit risk can change even though Treasury yields are unchanged because the spread required by the market changes. The measure of how a non-Treasury issue`s price will change if the spread sought by the market changes is referred to as spread duration. It estimates the price sensitivity of a non-Treasury issue to a 100 basispoints movement (widening/narrowing) in its spread relative to Treasuries.
private equity glossary
International treaties which Switzerland has concluded with other countries to ease or prevent double taxation. Double taxation occurs when a taxpayer is taxed for the same taxable object or tax process by two different governments. A DTA may make it possible for the withholding tax deducted in Switzerland to be reclaimed, in whole or in part, by foreign investors on their tax returns. Custody is the administration of securities by a financial institution; known as the custodian. The custodian is the primary record keeper of a client’s investments and collects income, processes tax reclaims and provides other services, according to client instructions. Strictly speaking, corporate bonds are those issued by companies. Generally, however, the term is used to cover all bonds other than those issued by governments in their own currencies.

Callable or Redeemable Bonds

For bonds the running yield is the annual interest payable as a percentage of the current market price. The redemption yield allows for any gain or loss of capital which will be realised at the maturity date. This term refers to the provision of equity capital and also comprehensive management support for young companies with above-average growth potential. The capital is typically tied up in the company for five to ten years. An investment in venture capital is not without its risks, as there is often no balance sheet or other key financial statistics available on the companies. Swing Pricing is an innovative method used to calculate the net asset values of investment funds. SSP allows an investment fund to settle the daily transaction costs arising from subscriptions made by incoming investors and redemptions made by outgoing investors. Under SSP, the net asset value is adjusted daily to take account of net transaction costs; the direction of the swing is determined by the daily net capital flows. In both cases, the same NAV applies to all incoming and outgoing investors on a particular date. For the funds under Luxembourg law, a threshold value may apply.
A finder is an individual who is not registered with FINRA as a broker-dealer, but who locates potential investors on behalf of an issuer and then facilitates an introduction between the investor and the company. Only registered broker-dealers may receivetransaction-based compensation. An accredited Investor is an investor that meets certain income or net worth requirements set by the Securities and Exchange Commission under Rule 501 ofRegulation D. For individuals, the income requirement is $200,000 annual income or $300,000 when combined with a spouse.

Is ROIC and Moic the same?

The ‘TVPI’ is the ‘Total Value to Paid-in Capital’ ratio. This ratio has other names, including Multiple of Investment Cost (MOIC) and the Return on Invested Capital (ROIC). TVPI is simply the total estimated value of an investment divided by the total capital invested.

Retirement reform legislation closed the GARS plan to individuals newly elected to the South Carolina General Assembly at or after the 2012 general election. The degree of uncertainty and/or the amount of possible loss on an investment. Bulk goods and raw materials, such as grains, metals, livestock, oil, cotton, coffee, sugar, and cocoa, that are used to produce consumer products. The products, services, information and/or materials contained within these web pages may not be available for residents of certain jurisdictions. Please consult the sales restrictions relating to the products or services in question for further information. Bonds whose coupons change every quarter or every six months in line with the development of the respective reference interest rates. Development which meets the needs of the present without compromising the ability of future generations to meet their own needs. In the fund business, subscription means the acquisition of fund units.

Prepayment Risk

Dividends can accumulate at a fixed rate (for example 8%) or simply be payable as and when determined by a company’s Board of Directors in such amount as determined by the board. Because venture backed companies typically need to conserve cash, the use of Cumulative Dividends is customary with the result that the Liquidation Preference increases by an amount equal to the Cumulative Dividends. Cumulative Dividends are often waived if the Preferred Stock converts to Common Stock prior to an IPO but may be included in the aggregate value of Preferred Stock applied to the Conversion Ratio for other purposes. Dividends that are not cumulative are generally called “when, as and if declared dividends.”

The complexity of a securities offering requires an issuer or fund sponsor to be familiar with key securities law terminology. The glossary below contains definitions and explanations of some of the more commonly used terms used in a private securities transaction or fund formation. Yield Refers to the income received from an investment and is usually expressed annually as a percentage based on the investment’s cost, its current market value or face value. WarrantA security issued by a company that gives the holder the right to buy or sell shares in that company at a specified price and within a certain timeframe. UnitShare in a unit trust, which is a type of managed fund whose value is linked to the underlying investments. The unit trust’s size grows or shrinks as investors buy or sell units. Unlisted/Unquoted stocksShares of ownership in companies that are not listed on a public exchange, known as private companies. SwapA swap is a derivative contract where two parties agree to exchange separate streams of cashflows.

Alternative Investment Fund Manager AIFM

The measure helps indicate how sustainable a company’s dividend is. The amount is variable, and is paid as a portion of the company’s profits. A security issued by a company that is either in default or in high risk of default and involves significant investment risk. The risk that a borrower will default on its contractual obligations to investors, by failing to make the required debt payments. For example, if a bond has a face value of £100 and a 5% annual coupon, the bond will pay £5 a year in interest. Profit and loss depends on the changing price of an underlying security, with the difference paid in cash. It provides exposure to all the benefits and risks of owning a security, but with neither party needing to actually own it. The sale and purchase of commodities in financial markets is usually carried out through futures contracts. A measure of the funds a bank has in reserve against the riskier assets it holds that could be vulnerable in the event of a crisis.
An RSU is a right to receive shares of stock once certain vesting conditions are met. The recipient does not own any shares of stock on the date of the grant. Certain offerings, commonly referred to as exempt offerings, are not registered under the Securities Act because an exemption from registration is available. The operating liquidity required by a company for its day-to-day operations, usually funded by debt such as overdraft or revolving credit. A start-up or otherwise risky enterprise company, often with high growth potential to match the high risk. An uptrend reversal after a company experiences a period of poor performance. Rights that enable a minority shareholder to participate in the sale of shares by a majority shareholder to a third party on the same terms. A bond or loan that ranks below senior debt in the event of default. This debt will not be paid until senior creditors are paid in full e.g. not pari passu. Shareholders can be passive or, in the case of private companies, more active such as being elected onto the board of directors, seeking monthly updates, etc.

The burn rate is usually expressed on a monthly or weekly basis. Angel — a wealthy individual who invests in companies in relatively early stages of development. The information and materials contained in the Website are protected by intellectual property rights, which are owned or claimed by the Management Company, its affiliated entities or third parties. The information and materials may be displayed and printed exclusively for your personal, non-commercial use, provided that you do not remove any intellectual property right or other notices therein. You agree not to transmit, reproduce or sell the information and materials contained in this Website in whatever form and by whatever means without the express prior written consent of the Management Company. We define “Professional Investors” as those who have the appropriate expertise and knowledge e.g. asset managers, distributors and financial intermediaries.

EQT targets €20B flagship PE raise; VC funding in H2’21 surges YOY – S&P Global

EQT targets €20B flagship PE raise; VC funding in H2’21 surges YOY.

Posted: Fri, 21 Jan 2022 08:00:00 GMT [source]

The Activity Portfolio is that part of the portfolio of a capital preservation fund that invests in international financial markets with the aim of participating in the movements on these markets. Investments are usually made in foreign-currency bonds and in equities. The TROIKA consists of the relevant portfolio company’s Chairperson , the responsible investment advisory partner within EQT Partners and the relevant portfolio company’s CEO. Working closely together on an informal and transparent basis, the TROIKA works as a sparring partner to the CEO and keeps EQT well informed of the company performance.

Sale and Purchase Agreement SPA

Essentially, a combination of capital return and income return. To be precise, the aggregate increase in the value of the portfolio resulting from the net appreciation of the principal of the fund, plus the net income during the period. This is expressed as a percentage of the value of the fund at the start of the period. The costs of buying and selling investments in order to implement a change in investment strategy. Read more about ethereum to usd calc here. The state body which supervises the activities of management companies. In Switzerland the Federal Banking Commission acts as the supervisory authority for the investment fund business.

Excellere Looks to Exit Ag Chems Maker SePro – The Deal Pipeline

Excellere Looks to Exit Ag Chems Maker SePro.

Posted: Thu, 09 Jun 2022 07:00:00 GMT [source]

Payments to the Fund made by investors who are admitted to the Fund after the Fund has already admitted investors and called-down capital from those other investors. The equalization payments are used to “equalize” the percentage of called-down capital commitment of each investor. This is done by distributing amounts to the “old investors” so that “old investors” and “new investor” have paid into the fund the same percentage of their Capital Commitment. Equalization Payments often require the “new investor” to pay compensatory interest to the fund to compensate the “old investors” for pre-financing the fund’s activities. Term used in the context of the Distribution Waterfall in the fund agreement. In the public markets, a “secondary offering” is one where stockholders of a public company holding unregistered shares of stock of the company sell these shares in the public markets as part of a registered offering.

The systematic and explicit inclusion of ESG information in investment processes, with the objective of enhancing investment decision-making. ESG integrated investors take into account the effect that ESG issues may have on the performance of individual investments or on whole portfolios. Derivatives are financial contracts, or financial instruments, whose values are based on, or ‘derived’ from, the value of something else, such as a bond, equity or currency. Derivatives offer investors exposure to the performance or risk characteristics of an underlying investment instrument, without actually owning the instrument. An asset-backed security is an investment backed by a loan, lease or mortgage payments. The owner of the ABS receives a share of the interest and principal payments made to the loan holder.

The buy-side of the market is mainly composed of investment firms that acquire and invest in securities. The burn rate is the amount of money that a company is spending before it generates any positive cash flow. It’s calculated simply by adding up the amount of money that the company is spending each month. A broker is an intermediary that acts on behalf of investors for securities exchanges. Bolt-on acquisitions are often referred to generally as “add-ons,” and provide enhanced technology and market opportunities for larger platform companies. Unlike tuck-ins or roll-ups, bolt-ons usually retain their own identities and also benefit from strategic cross-selling initiatives with the platform company. Angel investors are high-net-worth individuals who provide financial backing to start-up companies. Alpha is a strategy that is typically described as having an advantage over the market.

  • In most cases, these fees received by the General Partner are offset 100%, but some funds only offset these fees by 50%.
  • A group of securities with similar characteristics that tend to behave similarly in the marketspace, such as equities, bonds and cash equivalents.
  • Rights offerings are particularly common to closed-end funds, which cannot otherwise issue additional ordinary shares.
  • Annual revenue run rate; the revenue for the last month multiplied times 12 months as an estimate of the total revenue rate for the year.

A process whereby management of a company acquires all or some of the ownership of the company they manage either independently or in partnership with a private equity fund. J-curve- The pattern that emerges from charting cash flows from a fund investment, with losses in early years and profits later as they mature. ‘Fee drag’ contributes to the early dip in the J-curve as routine management fees are paid every year, but it takes many years before the fund investments appreciate. A company that has received an investment from a venture capital or private equity firm. When a fund’s performance over time looks like a ‘J’ on a chart. At the beginning of a fund’s lifecycle, performance and cash flows are negative because the fund is investing and not yet yielding returns.

What does ATM stand for in business?

An automated teller machine (ATM) is an electronic banking outlet that allows customers to complete basic transactions without the aid of a branch representative or teller.

Management fee – An annual fee paid to the Sponsor for their role in managing, operating, or overseeing an investment. 2% of invested capital is a common management fee in the lower middle market, scaling down to the ballpark of 1.5% in larger deals. Private equity is the hardest asset for the small investor to obtain directly. Current ownership – This may be the founders, a larger parent company, a private equity fund, or a number of other investors. A type of private equity investing that focuses on startups and early-stage companies with long-term, high-growth potential. When a private equity firm acquires a company to add onto an existing portfolio company. In add-on deals, the existing portfolio company is called the platform and the private equity firm is called the sponsor.

Private placement — the sale of securities directly to a limited number of investors. Post-money valuation — the valuation of a company immediately after an investment in the company. If, for example, an investor invests €2 million in a company valued at €1 million pre-money , the post-money valuation will be €3 million. Lock-up agreement — an agreement not to sell or transfer shares in a company for a specific period.

What is a good net IRR?

What is a Good IRR For an Investment? Most venture capital firms aim for an IRR of 20% or higher. However, it's important to consider the length of a project when evaluating an IRR. Longer-term projects could result in more returns, even if the IRR is lower.

As a result of the exemption, there is less disclosure required by these investors than for other more widely distributed issues, like IPOs and secondary offerings. Post-Money ValuationThe valuation of a company immediately after the most recent round of financing. For example, a venture capitalist may invest $3.5 million in a company valued at $2 million “pre-money” . As a result, the startup will have a post-money valuation of $5.5 million. Participating PreferredA preferred stock in which the holder is entitled to the stated dividend, and also to additional dividends on a specified basis upon payment of dividends to the common stockholders. The preferred stock entitles the owner to receive a predetermined sum of cash if the company is sold or has an IPO. The common stock represents additional continued ownership in the company. Open-end FundAn open-end fund, or a mutual fund, generally sells as many shares as investor demand requires. If money flows out of the fund the number of the fund’s outstanding shares drops.
An incubator is an organization that provides start-up companies with free or low-cost office space, resources, mentoring, and introductions to potential customers, vendors, strategic partners and investors. A capital gain is “unrealized” while the investor holds the investment, and is “realized” when the investor sells the investment. An asset purchase transaction is a type of acquisition where the assets of a company are acquired instead of the outstanding stock. Another common type of acquisition is a stock purchase transaction, where the outstanding stock of a company is acquired. Asset-based lending is a type of lending that is secured by assets of the borrowing company. The security gives the lender priority in claims to other creditors if the company defaults or goes bankrupt. Assets typically used as collateral for asset-backed loans include accounts receivable, inventory or specific equipment. Most countries have laws (“anti-trust laws’) that prohibit or discourage the concentration of a company’s market power . In the United States, these laws include the Sherman Act, the Clayton Act and the Hart-Scott-Rodino Antitrust Improvements Act (“HSR”). The government can then prohibit or challenge a transaction, or allow a transaction to proceed if certain changes are made.

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