PRIVATE EQUITY | DEMYSTIFY 12
DEFINITIONS
Auction
A process in which an investment bank or other corporate finance adviser invites several Private Equity houses to look at a particular company that is for sale and to offer a bid to buy it. Buy-in-management-buyout. A combination of a management buy-in (MBI) and a management buy-out (MBO). A marketplace in which long-term capital is raised by industry and commerce, the government and local authorities. Stock exchanges are part of capital markets. An entitlement accruing to an investment fund’s management company or individual members of the fund management team. Carried interest becomes payable once the investors have achieved repayment of their original investment in the fund plus a defined hurdle rate.
BIMBO
Capital Markets
Carried Interest
Conditions precedent Covenants
Certain conditions that a Private Equity firm may insist are satisfied before a deal is complete.
An agreement by a company that certain activities will or will not be carried out or that certain thresholds will be met.
Debt Fund
An investment pool, such as a mutual fund or exchange-traded fund (ETF), in which the core holdings comprise fixed income investments. An entity that raises capital from limited partners for a fund and determines which assets the fund should invest in. A buy-out initiated by institutional investors, such as Private Equity houses, where they take a controlling interest in the business. A buy-out in which the Newco’s capital structure incorporates a level of debt, much of which is normally secured against the company’s assets.
General Partner (GP)
Institutional Buy-out
Leveraged buy-out (LBO)
Leverage
The use of debt in an investment, including acquisitions and capital expenditures.
Made with FlippingBook HTML5