Glossary of Alternative Investment Terms

The duty is triggered when a company is in play as a target acquisition. Realized InvestmentAn underlying investment of a fund that has been exited. Re-capitalization FinancingCapital provided for a significant overhaul of a company’s financial structure. Penny StocksLow priced issues, often highly speculative, selling at less than $5/share. Non-accreditedAn investor not considered accredited for a Regulation D offering. Net Management FeeManagement fee net of management fee offsets. Net IncomeThe net earnings of a corporation after deducting all costs of selling, depreciation, interest expense and taxes.

Real estate fund units may be traded daily on the stock exchange or presented to the fund management company for redemption at the end of a financial year subject to a 12-month notice period. The repayment is made two months after expiry of the notice period. Investment specialists who manage the assets of an investment fund. They decide which securities to buy and sell within the defined investment principles.

Alternative Investment Fund Manager AIFM

Less probably much less, risky and less expensive than investor debt. An funny name for money that’s somewhere between bank debt and investor debt. The group of senior partners and sometimes non-executives that ultimately decide on which asset to buy. So the two people who should wake up each morning working about the business performance and fretting about how to execute on the opportunity are the CEO and the Investment Director who bought the asset. If you fail to agree final terms during your exclusivity window, or your PE firm pulls out then you can go to your other bidders. In this situation, though, other bidders will want to know why your deal fell apart. 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.

Unlike limited partners, general partners execute and operate investments and have full liability. GPs are typically paid using a “2 and 20” structure, referring to the 2% management fee and the 20% of profits above the agreed threshold . PE funds- The traditional access point to PE, a PE fund packages many individual PE deals together and sells investors a passive piece of the total pool under a limited partnership agreement. The fund is the general partner, who sources, structures, and manages the investments.

Financial Sponsor

High water mark The highest level that a fund’s NAV has reached at the end of any 12-month accounting period. The fund can usually charge a performance fee once its NAV exceeds this level. Fundamentals A basic principle, rule, law, or the like, that serves as the groundwork of a system. A company’s fundamentals pertain specifically to that company, and are factors such as its business model, earnings, balance sheet and debt. Flexible ISAAn ISA which allows you to withdraw and reinvest funds in the same tax year, without this reinvestment counting towards your annual ISA allowance.

Typically, this means that 25% of the grant will vest after one year, and the balance will vest in equal monthly installments over the following 36 months. A document that includes the basic terms of a company’s fundraising round . Once signed, it indicates that the investor and the company intend to move forward to complete the transaction and stipulates the major economic or corporate governance terms related to the investment. The run rate is how the financial performance of a company would look like if the current results are extrapolated out over a certain period of time. A type of equity security that has certain rights over common stockholders. These rights may include, but are not limited to, liquidation preferences, dividends, anti-dilution clauses, and managerial voting power. Rights of an investor to have their shares included in a registration of a company’s shares in preparation for an IPO. An agreement that is frequently required by early, or large, investors in a company.

Risk management

A security which is secured (or ‘backed’) by a collection of mortgages. Investors receive periodic payments derived from the underlying mortgages, similar to coupons. The policies of a central bank, aimed at influencing the level of inflation and growth in an economy. It includes controlling interest rates and the supply of money.

The distribution or spread of investments across a variety of different individual stocks, sectors, countries and currencies. Diversification, or the spreading of risk – a characteristic common to all investment funds – is regarded in modern portfolio theory as the key factor in reducing risk. Systematically distributing investments over a number of securities spreads risk so that the total risk of a portfolio is significantly lower than that of the individual securities. Read more about how do i mine litecoin here. Should investments also be diversified across various investment instruments, equities, bonds, money market paper, risk is reduced once again compared to a pure equity portfolio. Finally, spreading investments across a wide geographical area leads to a further reduction in risk. Interestingly, a portfolio’s return potential increases with geographical diversification, e.g. adding foreign equities to a Swiss equity portfolio.

Unlike program-related investments , MRIs are not an official IRS designation, and different funders utilize different names to refer to this kind of impact investment. PRIs are another tool foundations can use to align their assets in service of their mission. A fund created to invest in private equity or venture capital funds. This entity is often referred to as a Limited Partner to the venture capital funds. Also known as Equity Crowdfunding, Crowdinvesting gives people the ability to invest small or large amounts of money in a private company in exchange for shares or a percentage of ownership. Popular platforms such as Crowdcube and Seedrs in the UK provide such a service.

The residual value of a fixed asset is often referred to as the value of it at the end of its lease or its useful life. This calculation provides a rough estimate of the future value of a good. A CRM is a platform that is used to house data about an organization’s current and potential customers, from contact information to every interaction to relationship details. Conference intelligence refers to capturing data from both in-person and online conferences, trade shows, and business events in order to improve sourcing strategies. Conference intelligence platforms offer cross-referenced information on specific conference sectors, exhibitor lists, locations, and other key data points. A financial accelerator is a type of program that aims to stimulate small changes in the economy through the actions of financial markets.

Following the Seed round, the Series A round is usually led by Venture Capital funds, given the amount of capital being raised and higher valuations; as such expect rigorous a due diligence process. Companies raising a Series A round are usually revenue-generating, but can still be pre-profit. The financial projections of a start-up, typically covering the next 3-5 years. A financial model should include at a minimum a P&L, cashflow detail and key balance sheet items – with more advanced financial models having a full P&L, cashflow statement and balance sheet for the whole 3-5 year period. Funds lent to a company by an institution in the form of a loan which requires interest payments and the eventual repayment of the loan. Increasingly flexible options are now available through various FinTech companies. Waiting periodThe time between the initial filing of a registration statement and its effective date. Straight lease A lease specifying a fixed amount of rent that is to be paid periodically, typically monthly, during the entire term of the lease. SecuritizationThe process of converting an illiquid asset, such as a mortgage loan, into a tradable form, such as mortgage-backed securities. Secondary marketA market where existing mortgage loans are securitized and then bought and sold to other investors.
private equity glossary
Fund Commitment/Investment CommitmentA Limited partner’s obligation to provide a certain amount of capital to a private equity fund for investments. Full Ratchet Anti-dilutionThe sale of a single share at a price less than the favored investors paid reduces the conversion price of the favored investors’ convertible preferred stock “to the penny”. For example, from $1.00 to 50 cents, regardless of the number of lower priced shares sold. Follow-on fundingCompanies often require several rounds of funding. If a private equity firm has invested in a particular company in the past, and then provides additional funding at a later stage, this is known as ‘follow-on funding’.

  • Funds are provided by seed venture capitalists, angels (high-net-worth individuals) or friends and family to the founders of a start-up company.
  • Companies raising a Series A round are usually revenue-generating, but can still be pre-profit.
  • It is calculated by net income plus depreciation and amortization then minus capital gains from property sales.
  • Upside Deviation Upside Deviation is a measure of upside opportunities.
  • A company that assigns credit ratings to issuers of debt – such as governments or companies.
  • The total amount of money being borrowed or lent; the initial amount of money invested.

An alternative to a priced round is raising capital in a financing round where the valuation is not established as part of the round, such as in a convertible note financing or a Simple Agreement for Future Equity financing. See “Financing Round”, “Convertible Note” and “Simple Agreement for Future Equity.” A liquidity event is one where an investor realizes its investment. Initial public offerings can also be liquidity events if the investor is able to sell its stock as part of the IPO.
Investment funds which invest in short-term fixed-interest paper in specific currencies. Period of time from the issue of a bond to its due date or to the premature repayment of the bond. Someone who offers to buy and sell securities acting as a principal. This contrasts with the operations of a broker who acts as an agent for the investor.

Inflation dampens dealmaking outlook; May entries dip to 12-month low – S&P Global

Inflation dampens dealmaking outlook; May entries dip to 12-month low.

Posted: Fri, 10 Jun 2022 07:00:00 GMT [source]

A way of spreading risk by mixing different types of assets/asset classes in a portfolio. It is based on the assumption that the prices of the different assets will behave differently in a given scenario. Assets with low correlation should provide the most diversification. An investment style that goes against market consensus or a conventional approach. Contrarian investors believe that crowd behaviour can lead to mispricing opportunities in financial markets. An investment strategy where a long-term view is taken, regardless of short-term fluctuations in the market. A term sheet is a non-binding agreement that sets the terms and conditions of an investment. It’s very important for startups to have this type of document in order to attract potential investors. Seed funding is typically the first official funding stage for a startup.

What is the difference between MoIC and TVPI?

Multiple on Invested Capital (MoIC) is calculated by dividing the fund's cumulative realized and unrealized value by the total dollar amount of capital invested by the fund. TVPI provides a measure of investment performance towards the end of a fund's life.

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