The Ultimate Glossary of Terms for Dealmakers

The allocation of payments made to stockholders after a company sale or other liquidation events, based on liquidation preference. The beginning or first stage of a new venture or potential investment. A fund with wide-ranging investment activity across sectors and development stages. Experienced generalists can move in and out of different types of investments, which is often not possible for a specialist. The total value of a company, including the fully-diluted market capitalization and net debt. When a large company takes a minority position in a small but promising company in a related field. The goal is to benefit from the smaller company’s growth and innovation. The final event that completes an investment, when documents are signed, funds transferred, and ownership legalized.

Total market value of a company, calculated by multiplying the number of shares by the price per share. Companies are usually classified as either large cap, medium cap or small cap. The main parts are commodities such as oil, infrastructure such as communication and transport, hedge funds and absolute return funds . A positive alpha is a measure of how much a fund has outperformed its benchmark, and a negative alpha is a measure of how much a fund has underperformed its benchmark.

Emerging economies bonds

NCREIF An association of real estate professionals who serve on working committees, sponsor research articles, seminars and symposiums, and produce the NCREIF Property Index. NASDAQNational Association of Securities Dealers Automated Quotation. US electronic securities market that quotes prices through a computer network, and allows brokers to conduct trades online or via telephone. Loan-to-value ratio The ratio of the value of the loan principal divided by the property’s appraised value.

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Manner in which the investment decisions are made to achieve the investment objective. The commission charged by the distribution unit to the investor upon subscription of units. The majority of innovators are small, new companies whose products offer proven environmental benefits and high resource efficiency. Examples include suppliers of organic food and energy producers which use renewable energy sources such as wind and solar power.

PIPE Offerings

You start an exclusivity period by signing a short agreement or letter saying that you will now deal with that PE firm exclusively and will not talk to others. You’ll put your other bidders on hold so they know they’ve lost the deal. This is a report written by management consultants on the commercial aspects of your business. They will analyse and explain your market, your position in it, the size of it, it’s growth, your customers and your product. Some of these will have worked for your some will have worked for the PE firm.

It’s also known as having an “edge.” You may hear alpha referred to as an abnormal rate of return. If the $1 million valuation is pre-money, the company is worth more than if the $1 million valuation is post-money (i.e., includes the $250,000 in new money). A secondary market is a market where existing securities are bought and sold in transactions between investors, rather than from the company. Cash flow statements show the company’s inflows and outflows of cash over a period of time (such as over the company’s fiscal year).

As the fund starts exiting investments, performance and cash flows increase. An investment vehicle for limited partners, managed by general partners. Limited partners commit capital to funds, and general partners invest the capital into assets. The IRR that private equity fund managers must return to their investors before they can receive carried interest. A bonus entitlement accruing to an investment fund’s management company or individual members of the fund management team. Carried interest (typically up to 20% of the profits of the fund) becomes payable once the investors have achieved repayment of their original investment in the fund plus a defined hurtle rate. Two popular methods are the “calendar time” and the “time zero” methods. The “calendar time” approach (sometimes called “dollar-weighted” in the private equity industry press) entails lining up all drawdowns and returns of capital in the year during which they occurred. The “time zero” method assumes that all investments are made at the inception of the fund. These different methods can produce dramatically different IRRs.

Read more about convert btc to dollars here. ClosingA period of time, usually less than seven days, after a registration statement is effective and the offering commences, giving the underwriters time to receive payment for the securities. AppraisalAn estimate of a property’s fair market value that is typically based on replacement cost, discounted cash flow analysis and/or comparable sales price. Alternative or specialty investmentsProperty types that are not considered conventional institutional-grade real estate investments. Examples include congregate care facilities, self-storage facilities, mobile homes, timber, agriculture and parking lots. An investor portal is a method of delivering information to investors and other parties virtually. An investor portal differs from other data delivery methods, like a virtual data room, in that it provides a two-way channel of information sharing between investors and fund managers. Done correctly, investor portal technology can create a win-win environment for LP communications.

Withholding tax

Futures contracts are standardised and trade on regulated exchanges. Ex-dividend, ex-distribution or XD dateThe date on which declared distributions officially belong to underlying investors. On the XD date, the stock’s price usually falls by the amount of the dividend, reflecting the payout. Dividend yieldAnnual income distributed by a company as a percentage of its share price as at a certain date. DividendA share in the profits of a company, paid out to the company’s shareholders at set times of the year. CapitalisationThe total market value of all of a company’s outstanding shares. Capital growthOccurs when the current value of an investment is greater than the initial amount invested.
EBITDA is a common metric used to value buyout valuations – a multiple of EBITDA is often used to describe the sale price of a company. Note that EBITDA is not the true cash flow of a company, as it does not include items such as changes in working capital or capital expenditures. A “distribution” is cash and/or stock paid to an investor from a fund. A “cash distribution” is just that, a distribution paid in cash. An “in-kind distribution” is a distribution of securities in a portfolio company, usually stock. Discounted cash flow, or DCF, is a valuation model that projects a company’s cash flows out in the future, and then calculates the present value of these cash flows to determine the value of a company.

Performance Fee

A fund of funds is a pooled investment strategy that invests in other types of funds. Instead of stocks, bonds, or other more traditional types of securities, a fund of funds portfolio contains underlying holdings of other funds. Because of this, fund of funds have unique needs throughout their investment life cycles, from the back office to fundraising to investor reporting. Allvue provides fund of fund managers with a full suite of solutions to help them more easily and efficiently manage their portfolio, operations, and investor relations.

  • Investment bankInvestment banks do not accept deposits; they are intermediaries only.
  • Reflects the annualised income net of expenses of the fund as a percentage of the market unit price of the fund as at the day shown.
  • Measures how many times in a given period a company can replace the inventories sold.
  • ProxyA formal power of attorney document that authorizes another shareholder, a representative of the shareholder or the company’s management, to vote on behalf of the shareholder at the annual meeting.
  • The derivative itself is a contract between two or more parties.

Capital provided for recovery situations is also included in this category, as is the refinancing of bank debt. These products have both debt and equity characteristics and some of them are convertible debt, subordinated loan investments, and preferred stock and income note investments (also referred to as C-loan). Refers to the interest paid on a bond or the dividends on a stock — otherwise known as investment income. Total return — what matters or should matter most to investors — is the sum of yield and capital appreciation. A term popularized by mathematician Nassim Taleb, it refers to a rare and extreme event that has the potential to throw financial markets into turmoil.

For example, if a portfolio is 100% long and 20% short, its net exposure is 80%. Gross exposure is calculated by combining the absolute value of both long and short positions. For example, if a portfolio is 100% long and 20% short, its gross exposure is 120%. A widely-used benchmark rate that banks use to charge each other for short-term loans. It serves as a reference for short-term interest rates more widely. Consists of taking an offsetting position in a related security, allowing risk to be managed.

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