Venture Capital Glossary

private equity glossary

Turnover Ratio – Percentage of holdings in a mutual fund that are sold in a specified period. An organization or individual who has responsibility for one or more accounts. An individual who, as part of a fund’s board of trustees, has ultimate responsibility for a fund’s activities. Treasury note – Negotiable medium-term debt obligations issued by the U.S. government and backed by its full faith and credit. Treasury bond – Negotiable long-term debt obligations issued by the U.S. government and backed by its full faith and credit. Treasury bill – Negotiable short-term debt obligations issued by the U.S. government and backed by its full faith and credit.

private equity glossary

Unimproved landMost commonly refers to land without improvements or buildings but also can mean land in its natural state. Under constructionThe period of time after construction has started but before the certificate of occupancy has been issued. Total retail areaTotal floor area of a retail center less common areas. It is the area aion coinmarketcap from which sales are generated and includes any department stores or other areas not owned by the center. Total commitmentThe full mortgage loan amount that is obligated to be funded if all stated conditions are met. Tenant improvement allowanceDefines the fixed amount of money contributed by the landlord toward tenant improvements.

A Portfolio Company is a specific company that has an ownership/equity position from an owned company perspective . Startups are usually seeking to solve a problem of fill a need, but there is no hard-and-fast rule for what makes a startup. A company is considered a startup until they stop referring to themselves as a startup. A reference to the beginning of a venture, or the earliest point of a startup. This describes a business that is targeting another business with its product or services. B2B technology is private equity glossary also sometimes referred to as enterprise technology. This is different from B2C which stands for business to consumer, and involves selling products or services directly to individual customers. 12b-1 fee – A mutual fund fee, named for the SEC rule that permits it, used to pay for broker-dealer compensation and other distribution costs. If a fund has a 12b-1 fee, it will be disclosed in the fee table of the fund’s prospectus. Volatility – The amount and frequency with which an investment fluctuates in value.

Portfolio Construction

A contract that sets out how the company will be operated and the shareholders’ obligation and rights. Super pro-rata right the investor (let’s say in your A round) will ask for more than their pro-rata right. 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 vary depending on the issuer and holder. A period of time that must elapse before the holder of a specific security can transfer or sell the security. 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. If the dividend is not declared during the period stated in the corporate charter, the dividend accrues and is payable in a later period. If a dividend right isn’t cumulative, the dividend would be lost forever if it’s not declared during the period stated in the corporate charter.

Mortgage brokerA firm or person that serves as an intermediary, helping to facilitate a mortgage transaction between a lender and a borrower. MortgageA legal document by which real property is pledged as security for repayment of a loan until the debt is repaid in full. In a central business district this might extend to buildings up to 25 stories. Meeting spaceIn hotels, space made available to the public to rent for meeting, conference or banquet uses. Mechanic’s lienA claim created for the purpose of securing priority of payment of the price and value of work performed and materials furnished in constructing, repairing or improving a building or other structure. Marketable titleA title free from encumbrances that could be readily marketed to a willing purchaser. Long-term leaseIn most markets, this refers to a lease whose term is at least three years from initial signing to the date of expiration or renewal. Lock-box structureA structure whereby the rental or debt-service payments are sent directly from the tenant or mortgagor to the trustee. LienA claim or encumbrance against property used to secure a debt, a charge or the performance of some act.

private equity glossary

LIBOR The interest rate offered on Eurodollar deposits traded between banks, also called swaps. Letter of creditA commitment by a bank or other person that the issuer will honor drafts or other demands for payment upon full compliance with the conditions specified in the letter of credit. Letters of credit are often used in place of cash deposited with the landlord in satisfying the security deposit provisions of a lease. LeaseAn agreement whereby the owner of real property gives the right of possession to another for a specified period of time and for a specified consideration. Investment-grade CMBSCommercial mortgage-backed securities with ratings of “AAA,” “AA,” “A” or “BBB”. InventoryAll space within a certain proscribed market without regard to its availability or condition.

Accrued but unpaid dividends are sometimes convertible into shares of Common Stock. Means the number of shares of Common Stock into which each share of Preferred Stock is convertible. Employee stock vesting equity glossary agreements generally 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.

Venture Capital

VCs sift through tons of deals , outright rejecting many of them, eliminating others through research, and finally seriously pursuing about 1% of all deals that cross their desks. Board of Directors – the people calling the shots, broadly speaking. Startup founders should be on the board, plus the VCs that fund fund them often get a seat too . Accredited Investor – a wealthy investor who meets certain SEC requirements for net worth and income. Accelerator – the speed ramp that takes startups from adolescence to something resembling early adulthood. Accelerator programs typically last three to six months and are meant to help startups that are already performing scale up and create the organizational framework that they’ll need to thrive. If this was a useful reference, leave your thoughts in a comment and tag someone you believe would benefit.

private equity glossary

CFTC registration requires membership in theNational Futures Association , a self-regulatory organization responsible for overseeing the managed futures market. CPO and CTA registration requires, among other things, membership in theNational Futures Association , a self-regulating organization established by the CFTC to regulate the futures market. TheCommodity Exchange Actprohibits fraudulent practices in trading futures contracts and other commodity derivatives, and provides for regulation of the managed futures industry. Any hedge fund manager trading in commodities or futures must comply with the Commodities Exchange Act. A trade order management system, also known simply as an order management system or OMS, is a software solution that facilitates and manages trade order execution. Funds use trade order management systems when filling orders as a way to increase efficiencies and reduce costs across their workflows. Allvue offers an all-in-one solution that provides powerful research tools, credit management, analysis, tracking, and more. An individual who holds or manages assets for the benefit of another. The JSRS is a single-employer defined benefit retirement plan that provides retirement and other benefits to state judges and solicitors.

Venture Capital, Private Equity And M&a Glossary

These vehicles invest and divest side by side with the primary fund. Rights and safeguards to mitigate the risks associated with a minority shareholding. These rights will enable the minority shareholders to monitor their investee firms, influence the proceedings, and pre-empt or mitigate potential conflicts of interest with the majority shareholder. A legal provision that provides a buyer with the right to terminate an acquisition contract in case of an event that substantially impairs the value of the acquisition target. 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. The majority shareholder controls the board of directors and hence can dictate strategic and operational decision-making.

Ancillary tenants are smaller tenants of a shopping mall which occupy less space and pay a higher rent rate. Amortization is a repayment model where the balance is repaid in multiple installments over time with each installment consisting of both principal and interest. The Adjusted Tax Basis is the proportionate value of an dead cat base asset or security after adjusting for any deductions taken on, or capital improvements to the asset or security. Adjustable-Rate Mortgages are mortgages whose interest rates vary according to some benchmark. Generally, the loan starts with a fixed rate for a period, then moves to one where the rate is adjusted every month.

A performance fee, or carried interest, is a share of the profits generated by the investment manager as a result of a successful investment strategy. A realized performance fee is a fee that has been paid to the investment manager. An unrealized performance fee is a fee that is owed to the investment manager but has not yet been paid. The purchase of a controlling interest in a corporation in order to take over assets and/or operations. The degree of uncertainty and/or the amount of possible loss on an investment. Investment markets in countries which are not fully developed and where there may be a higher risk of default.

  • Technically, a leverage ratio measures how much a company has borrowed versus how much its shares are worth.
  • A private equity firm is an investment firm that invests in such companies .
  • In 2018, there was over $80 billion in new commitments – a significant increase from the $18 billion raised in 2013.
  • Leverage can be simply thought of as “borrowing.” A company that is highly leveraged has borrowed a lot of money to fund its operations – and must eventually pay that money back.
  • Private equity is the stock of a company that is not a “public” company and therefore whose shares are not freely traded on a stock market.
  • The place where you get your haircut is probably a “private” company .

Individual Retirement Account A type of retirement investment account whose contributions and interest are tax-deferred until a certain age requirement is reached. An individual is able to contribute pre-tax dollars to this account up to a certain amount each year. ImprovementsIn the context of leasing, the term typically refers to the improvements made to or inside a building but may include beam coin price any permanent structure or other development, such as a street, sidewalk, utilities, etc. HoldbacksA portion of a loan commitment that is not funded until an additional requirement is met, such as completion of construction. GuarantyAgreement whereby the guarantor assures satisfaction of the debt of another or performs the obligation of another if and when the debtor fails to do so.

Investors Who Invest In Investors

Deferred maintenance accountAn account a borrower is required to fund that provides for maintenance of a property. Deed of trustAn instrument used in place of a mortgage by which real property is transferred to a trustee to secure repayment of a debt. Deed in lieu of foreclosureA deed given by an owner/borrower to a lender to satisfy a mortgage debt and avoid foreclosure. Cumulative discount rateExpressed as a percentage of base rent, it is the interest rate used in finding present values that takes into account all landlord lease concessions. Cross-collateralizationA private equity glossary grouping of mortgages or properties that serves to jointly secure one debt obligation. CouponThe nominal interest rate charged to the borrower on a promissory note or mortgage. Cost-of-sale percentageAn estimate of the costs to sell an investment representing brokerage commissions, closing costs, fees and other necessary disposition expenses. ConveyanceMost commonly refers to the transfer of title to property between parties by deed. The term may also include most of the instruments with which an interest in real estate is created, mortgaged or assigned.

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