Venture capital, private equity and M&A glossary

The Exchange Act—often referred to as the before ’34 Act—created the SEC and empowers it with broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, clearing agencies, and the nation’s securities self-regulatory organizations . Vesting conditions may include the achievement of milestones, such as length of employment or performance metrics. A term commonly used to refer to certain types of exempt offerings. Read more about eth converter to usd here. The maturity date is when a borrower must make the final payment on a loan or other debt to the lender. Liquidity refers to how easily or quickly a security can be bought or sold in a secondary market without significantly impacting its trading price. A solicitation that conditions the market for an offering of securities is generally viewed as a general solicitation that is marketing the securities. Some exempt offerings prohibit the use of general solicitation to market the securities. Slang for an investor who seeks to acquire distressed or dying companies with the goal of making a profit in a quick turnaround by any means necessary. Enterprise capital provided to support continued expansion and development after production and baseline marketing are already operational.

The performance allocation is one of the defining characteristics of alternative funds , and distinguishes them from mutual funds, which are generally permitted to charge onlymanagement fees. The performance allocation is intended to align the interests of the fund manager with that of the investor and provide significant upside potential for fund managers. Hedge funds and other investment funds and private issuers often rely on broker-dealers asplacement agentsto find capital. Due to increasing FINRA regulations, broker-dealers have heavy due diligence standards when offering private placements, which require them to scrutinize the risks of the offering. Accordingly, most broker-dealers are unwilling to sell private placements and it is very difficult for a start-up fund manager or a new company to find broker-dealers that are comfortable placing theirsecurities.

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Confusingly, leverage can also be used to refer to the amount a company is funded through borrowing, i.e. how much money it owes compared to how much money or assets it owns. Investments outside of the traditional asset classes of equities, bonds and cash. Alternative investments include property, hedge funds, commodities, private equity, and infrastructure. An equity offering is an offering ofsecuritiesthat gives investors an ownership interest in the company. Examples of equity offerings include stock , limited partnership interests, or membership interests/units in a limited liability company. A capital account is an account on the company’s books that shows the owner’s net investment in the company. It is calculated by taking the capital contribution of the owner, adding the owner’s share of company profits, and then subtracting the owner’s share of company losses in addition to the distributions or returns of capital.

Chapter 7That portion of the federal bankruptcy code that deals with business liquidations. Chapter 11That portion of the federal bankruptcy code that deals with business reorganizations. Cash flowThe revenue remaining after all cash expenses are paid. Capital improvementsExpenditures that arrest deterioration of property or add new improvements and appreciably prolong its life. Build-outSpace improvements put in place per the tenant’s specifications. Takes into consideration the amount of tenant finish allowance provided for in the lease agreement. BankruptThe state of an entity that is unable to repay its debts as they become due. Balloon, or bullet, loanA loan with a maturity that is shorter than the amortization period. Average occupancyThe average occupancy rate of each of the preceding 12 months.

Bonds

The money required to begin developing an idea for a new business or product. The funding comes from private investors in exchange for equity in the company or a share of potential profits. Typically, this only covers the early costs for proof of concept and will require additional funding for the start-up phase. A debt structure that allows issuers to accelerate cashflow on an underlying asset. Typically, a company will securitize its future trade receivables and an investor will sell loan receivables . Requires a special purpose vehicle to be established, the receivables converted into a security and sold to third-party investors. The inherent uncertainty and variability surrounding outcomes and the measurable likelihood of loss or underperformance. The lack of liquidity in private company shares may be considered a risk by certain investors but can be mitigated with good corporate governance.

It is influenced by many factors including household, government and business spending, trade, technology and central bank policy. A company reducing its borrowing/debt as a proportion of its balance sheet. A transaction that aims to protect the value of a position from unwanted moves in foreign exchange rates. A score usually given by a credit rating agency such as Standard & Poors, Moody’s and Fitch on their creditworthiness of a borrower. Standardised scores such as ‘AAA’ or ‘B’ are used however can vary depending on the credit rating agency. Moody’s, another well known credit rating agency, uses a slightly different format with Aaa and B3 . Explore our podcasts featuring the latest insights from our investment teams on a variety of topics. Our latest research and commentary on Investment Trust investing. Securities transactions are conducted through The Forbes Securities Group, LLC (“FSG”), a member of FINRA and SIPC.

DeedA legal instrument transferring title to real property from the seller to the buyer upon the sale of such property. Deal structureWith regard to the financing of an acquisition, deals can be unleveraged, leveraged, traditional debt, participating debt, participating/convertible debt or joint ventures. CovenantA written agreement inserted into deeds or other legal instruments stipulating performance or non-performance of certain acts, or use or non-use of https://www.beaxy.com/buy-sell/gunthy-btc/ a property and/or land. Cost of CapitalThe cost of the funds employed as the result of an investment decision. Construction managementThe act of ensuring the various stages of the construction process are completed in a timely and seamless fashion. Common area maintenanceRent charged to the tenant in addition to the base rent to maintain the common areas. Examples include snow removal, outdoor lighting, parking lot sweeping, insurance, property taxes, etc.

When stock is returned to a company by departed employees whose stock has not yet vested. 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 contract that requires one party to transfer the cash proceeds from a liquidation of equity to another party in exchange for cash received prior to the liquidation event. A fundraising round in which the company is valued at a lower value per share than previous rounds.

Limited Partner ClawbackThis is a common term of the private equity partnership agreement. It is intended to protect the general partner against future claims, should the general partner of the limited partnership become the subject of a lawsuit. Under this provision, a fund’s limited partners commit to pay for any legal judgment imposed upon the limited partnership or the general partner. Typically, this clause includes limitations in the timing or amount of the judgment, such as that it cannot exceed the limited partners’ committed capital to the fund. J-Curve EffectThe curve realized by plotting the returns generated by a private equity fund against time . The common practice of paying the management fee and start-up costs out of the first draw-down does not produce an equivalent book value. As a result, a private equity fund will initially show a negative return. When the first realizations are made, the fund returns start to rise quite steeply.

A style of fund management that aims to construct a portfolio to provide the same return as that of a chosen market index. This can be achieved on a full replication or sampling basis or via synthetic replication. Full replication involves buying all the stocks in the index in the same proportions in which they make up the index. Sampling means using statistical methods to choose an appropriate portfolio to best match index performance. Indexes make it possible to compare the performance of a fund which is invested in a specific market with the development of this market. The investor knows the net asset value of the fund at the time of subscription/redemption. UBS Asset Allocation funds and hedged UBS ETFs specifically hedge against exchange-rate risks. With real estate funds, rental income as a percentage of market value. Together with money market instruments, bonds are referred to as fixed-income securities because they make regular, fixed-interest payments and repay the principal amount in full at maturity. This acknowledges the fact that temporary trends do exist on the financial markets.

Expense Ratio

Valuing stocks or other financial instruments held against the current market price to determine the paper profit or loss to date. An investment fund established under Luxembourg law and managed by a management company domiciled in Luxembourg. For example, when you get a bank loan, the interest rate is the rate you pay and will often depend on how much you want loaned to you. A measure of the increase in prices of goods and services over time. An investment fund which restricts its investments to units of other investment funds. Normally at least 95% of a sub-fund’s total assets will be invested in component securities of its index and/or exposed to its index by entering into derivatives replicating its index and/or its component securities.

• Regulation D Rule 505, like Rule 504, is governed by Section 3 of the Securities Act.
• This financial glossary of terms is intended to explain terms of particular relevance to Caspian Energy Inc. and its business.
• In active co-investing the LP is invited early on to join forces with a PE fund and shares in the work, cost and risk of a not yet completed transaction.
• Rule 505Rule 505 of Regulation D is an exemption for limited offers and sales of securities not exceeding $5,000,000.

It also can take the form of a letter of credit or other financial instrument. Secondary, or follow-on, offeringA stock offering made by an existing public company. Secondary financingA loan on real property secured by a lien junior to an existing first mortgage loan. Sale-leasebackAn arrangement by which the owner-occupant of a property agrees to sell all or part of the property to an investor, then lease it back and continue to occupy space as a tenant. Reversion valueA lump-sum benefit that an investor receives or expects to receive at the termination of an investment. Retail investorWhen used to describe an investor, retail refers to the nature of the distribution channel and the market for the services – selling interests directly to consumers. RentCompensation or fee paid for the occupancy and use of any rental property, land, buildings, equipment, etc. REMIC A product of the Tax Reform Act of 1986, REMICs are designed to hold a pool of mortgages for the exclusive purpose of issuing multiple classes of mortgage-backed securities in a way that avoids a corporate double tax. Registration statementForms filed with the Securities and Exchange Commission in connection with a proposed offering of new securities or the listing of outstanding securities on a national exchange.

Historically private, risk-averse investors, there’s increasing interest in investing into early-stage ventures offering higher returns, like start-ups. Net investment incomeThe income or loss of a portfolio or entity resulting after deducting all expenses, including portfolio and asset management fees, but before realized and unrealized gains and losses on investments. Internal rate of return A discounted cash-flow analysis calculation used to determine the potential total return of a real estate asset during an anticipated holding period. Institutional-grade propertyVarious types of real estate properties generally owned or financed by institutional investors. Core investments typically include office, retail, industrial and apartments.

The net worth requirement is $1,000,000 exclusive of the positive equity in the investors’ primary residence. UCITSStands for Undertakings for Collective Investments in Transferable Securities. Top-down investingAn investment approach that analyses economic factors, ie surveys the ‘big picture’, before selecting which companies to invest in. The top-down investor will look at things like economic growth, inflation and the business cycle to pick stocks. Short-dated corporate bondsFixed income securities issued by companies and repaid over relatively short periods. Short sellingThe practice whereby market participants sell assets they do not own after borrowing them in exchange for a fee from someone who does own them. The short-seller must eventually return the borrowed asset by buying it in the open market. If the asset price has fallen, the short-seller buys it for less than they sold it for, thus making a profit. PrincipalThe face value of a fixed income security, which is the amount due to be repaid to the investor by the borrower when the security reaches the end of its life. Index trackingA fund management strategy that aims to replicate the holdings and the performance of a particular index.

A broker who simply executes his client’ orders, without giving any advice. This is the cheapest form of stockbroking and is often done by telephone. Leading company with the best record of environmental achievement in its industry. Using a detailed analytical process, UBS identifies the leaders in each sector of the economy. Fee charged annually for the safekeeping and administration of securities.