Foundations A non-profit organization through which private wealth is distributed for the public good. It can either donate funds and support other organizations or provide the sole source of funding for their own charitable activities. Endowment An investment fund established by a foundation, university or cultural institution providing capital donations for specific needs private equity glossary or to further a company’s operating process. ); write-offs; repayment of preference share/loans; sale to another venture capitalist; sale to a financial institution. PitchBook is a financial technology company that provides data on the capital markets. A security that gives the holder the option to purchase a company’s stock at a predetermined price for a specified period.
Ratio of firm value to replacement cost of the assets owned by the firm. For instance, if you forecast cash flows for 10 years, the terminal value is the value at the end of the 10th year. one firm offers to buy the outstanding stock of the other firm at a specific price and communicates this offer in advertisements and mailings to stockholders. Increase in value arising from the combination of two firms, projects or assets that would not arise if the firms, projects or assets were independently run. spread over the market interest rate increases over time instead of remaining fixed over the bond�s life. spread over the market interest rate decreases over time instead of remaining fixed over the bond�s life. Changing financing mix by using new equity to retire debt or new debt to reduce equity.
Alternative Mutual Fund (alt Fund)
When an investor gives a mature company capital it can use to expand or restructure in exchange for equity . A private equity glossary fund-of-funds devotes all its time to evaluating fund managers, which usually leads to above-average returns.
However, there are extra fees associated with investing in a fund-of-funds. A secure, digital location where potential investors can review confidential information on a target company, including financial statements, compensation agreements, intellectual property and client contracts. A fund that is finished taking commitments from limited partners and is ready to make investments. private equity glossary The amount of capital available in a fund for investors to invest. How long it takes a company to spend the capital it received from investors. Any form of lending to a business that is collateralized or secured by a balance sheet asset. Pledged assets may include inventory, equipment or accounts receivable that will be redeemed in the event of default by the debtor.
This Portfolio Status option includes companies that are no longer in the portfolios of any of its investors. An investment strategy involving investments in companies for product development and initial marketing, manufacturing and sales activities. A measure of the cumulative investment returned relative to the amount of capital committed to the fund. A user defined list of private equity firms that can be used to screen against within the Private Equity component. Distributions to a limited partner investor from a fund in the form of cash. The amount of capital available to a management team for investments.
The date on which the company’s shares are offered at the initial public offering . The lowest amount raised for a group of funds in the selected time period. The median amount raised for a group of funds in the selected time period. The private equity glossary maximum equity amount invested by the firm during the time period selected. The highest amount raised for a group of funds in the selected time period. The sale or distribution of a company’s stock to the public for the first time.
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However, a small number of venture capitalists do provide seed capital. Recapitalisation –This refers to a change in the way a company is financed.
Purchase of shares/stock in a company from an existing shareholder rather than purchasing the stock directly from the company. The return on equity amount is calculated by dividing the common stock equity at the beginning of a period into the net income for the period after preferred stock dividends but before common stock dividends. A company that is privately owned and is not available for sale to the public on the stock exchanges. The equity value of a portfolio company including the round of financing. A fund that will be used to purchase existing interests in buyout, venture capital or mezzanine funds. A fund investment strategy involving financing for the expansion of a company which is producing, shipping and increasing its sales volume. The number of company’s shares offered at the initial public offering .
Registration Under The Securities Act Of 1933
It is the result of an injection of capital, either through raising debt or equity. Mezzanine financing– This is the term associated with the middle layer of financing in leveraged buy-outs. In its simplest form, this is a type of loan private equity glossary finance that sits between equity and secured debt. Because the risk with mezzanine financing is higher than with senior debt, the interest charged by the provider will be higher than that charged by traditional lenders, such as banks.
- This means that the company has only recently been established, or is still in the process of being established – it needs capital to develop and to become profitable.
- A venture capitalist will normally invest in a company when it is in an early stage of development.
- Early-stage finance– This is the realm of the venture capital – as opposed to the private equity – firm.
- But sometimes the firms will have multiple interimclosingseach time they have hit particular targets (first closings, second closings, etc.) and final closings.
- The term cap is the maximum amount of capital a firm will accept in its fund.
- Firms typically set a target when they begin raising the fund and ultimately announce that the fund has closed at such-and-such amount.
Buyout Fundingfunds Provided To Enable An Enterprise To Acquire Another Enterprise Or Product Line Or Business
However, equity provision– through warrants or options – is sometimes incorporated into the deal. Lead investor– The firm or individual that organises a round of financing, and usually contributes the largest amount of capital to the deal. Capital gain– When an asset is sold for more than the initial purchase cost, the profit is known as the capital gain. This is the opposite to capital loss, which occurs when private equity glossary an asset is sold for less than the initial purchase price. Capital gain refers strictly to the gain achieved once an asset has been sold – an unrealised capital gain refers to an asset that could potentially produce a gain if it was sold. An investor will not necessarily receive the full value of the capital gain – capital gains are often taxed; the exact amount will depend on the specific tax regime.