Limited Partner

Mutual Funds

TEV/TTM Revenue, usually used for valuing a company when it’s not profitable yet. Represents a class of stock that has some restrictions on the transfer or sale of the instrument. Generally, most non-public stock has some restrictions, though they may private equity glossary vary depending on the issuer and holder. Referred to as the risk associated with depending on a single charismatic individual in a startup; key tactic is to build a strong capable team around the individual, usually the founder, to mitigate this risk.

Holding Your Securities

Clause in the LPA that enables the LP to break the agreement if one of the major GPs in the fund leave. Generally, the exercise price is pegged to the “Fair Market Value” on the date of issuance, rather than the vesting date. Employee stock vesting agreements generally private equity glossary have a cliff, usually one year, before which no employee stock options vest. The size of the round that is set aside for a specific investor , usually communicated in a dollar amount. A sale of an LP interest combined with a commitment to invest in a GP’s next fund.

The group of senior partners and sometimes non-executives that ultimately decide on which asset to buy. You’ll pay them an amount private equity glossary of money that would make a casino owner blush. Not a bank at all, so don’t get them confused with the people who lend you money.

A database established by a target company and its advisors that contains all material documentation for due diligence. private equity glossary Financial covenants are a promise by the borrowing company that certain activities will or will not be undertaken.

Financial Planners

Second lien term loans are used as a bridge between first lien term loans and junior unsecured debt. They are secured against the same collateral as first lien loans but are only private equity glossary entitled to claims on it after the first lien debtholders are paid in full. A valuation technique that specifically takes flexibility of corporate decisions into account.

• Asset allocation– The percentage breakdown of an investment portfolio.
• This continues until the time when thecarried interestallocation, as agreed in the limited partnership, has been reached.
• Company buy-back– The process by which a company buys back the stake held by a financial investor, such as a private equity firm.
• Catch up– A clause that allows the general partner to take, for a limited period of time, a greater share of the carried interest than would normally be allowed.
• This means that sometimes the share value has decreased by the time the limited partner is legally allowed to sell.
• This usually occurs when a fund has agreed a preferred return to investors – a fund may return the cost of investment, plus some other profits, to investors early.

In an SPA, the specific definition of what constitutes a MAC at the target company varies from transaction to transaction and is formalized in the definitions of the agreement. Shareholders of an LGP participate in all revenues generated by the firm, including carried interest and fees. The order of priority and timing of distributions made to a fund’s LPs and its GP.

Financial Professionals

Information is power, power is money and to all gets traded on a nightly basis in the bars and restaurants around Mayfair. So when someone says “Feedback from the market is that so and so is going to get their offer rejected”, it translates to “An advisor told me in the pub last night something that is supposed to be highly confidential”. This is where you and your executive team go for dinner with your final shortlist of PE firms in order that they can confirm that you know which way to hold a knife private equity glossary and fork. Most PE deals are structured as a leveraged buy out meaning they rely on borrowing from the bank as a way of paying for the acquisition of the business. Investment Committees almost always seem to meet every Monday morning so you’ll find your investment director there presenting nervously toward the end of your process. Your investment director will represent you to the IC, will write investment papers explaining the investment opportunity and will answer their challenges and questions.

This is a situation where it will really help if you did Vendor Due-Diligence as you can take your DD with you to the next bidder. So if your business made £9m net profit, before taking a £2m depreciation charge on equipment and paying tax of £1.5m, everyone is interested in the £9m not the £5.5m of profit that you’ll actually report at Companies House. It’s not uncommon to find that you thought customers chose you for one thing but actually they value another. They will also look at key suppliers and see if there are any risks or concentrations there.