Comprehensive definitions of 550 terms commonly used in the private equity sector
Private equity has its own unique language—a blend of finance, legal, and business terms that can often seem opaque to newcomers and seasoned professionals alike.
The Umbrex Private Equity Glossary provides clear and concise definitions to this terminology, including:
- How the term works or applies in private equity
- Formulas
- Examples
- Advantages
- Challenges
- Key Considerations
List of Terms:
Table of Contents
A
- Absolute Return
- Accelerator
- Accreditation
- Accredited Investor
- Acquirer
- Acquisition
- Acquisition Agreement
- Acquisition Financing
- Active Management
- Add-on Acquisition
- Advisory Committee
- Affiliate
- Alpha
- Alpha Generation
- Alternative Assets
- Alternative Investment Fund (AIF)
- Alternative Investments
- Anchor Investor
- Angel Investing
- Angel Investor
- Annual Meeting
- Annualized Return
- Anti-Dilution Protection
- Antitrust Laws
- Asset Acquisition
- Asset Allocation
- Asset Class
- Asset Purchase Transaction
- Asset Test
- Asset-Based Lending (ABL)
- Assets Under Management (AUM)
B
C
- Call Option
- Cap Table
- Capital Account
- Capital Allocation
- Capital Appreciation
- Capital Call
- Capital Call Line of Credit
- Capital Commitment
- Capital Contributions
- Capital Distribution
- Capital Event
- Capital expenditure (CapEx)
- Capital Gain
- Capital Growth
- Capital Market
- Capital Overhang
- Capital Preservation
- Capital Raising
- Capital Reserve
- Capital Return
- Capital Stack
- Capital Structure
- Capital Under Management (CUM)
- Capitalization Table
- Carried Interest
- Cash Balance
- Cash Burn Rate
- Cash Drag
- Cash Flow
- Cash Flow Forecast
- Cash Flow Statement
- Catch-Up
- Claw-Back
- Closing
- Closing Conditions
- Club Deal
- Co-Investment
- Co-Sale Rights
- Cohort
- Collateral
- Committed Capital
- Common Shares
- Common Stock
- Compact
- Compound Annual Growth Rate (CAGR)
- Compounding
- Concentrated Portfolio
- Consolidated Balance Sheet
- Consolidated Cash Flow Statement
- Consolidated Financial Statements
- Consolidated Income Statement
- Consolidation
- Contrarian Indicator
- Contrarian Investing
- Contrarian Strategy
- Control Buyouts
- Control Person
- Control Premium
- Conversion Ratio
- Convertible Debt
- Convertible Note
- Convertible Preferred Stock
- Convertible Security
- Corporate Carve-Out
- Corporate Governance
- Corporate Venture Capital
- Correlation
- Correlation Coefficient
- Covenant
- Crowdfunding
- Crowdfunding Platforms
- Current Yield
- Customer Acquisition
- Customer Development
D
- Data Room
- Deal Flow
- Debt Financing
- Debt Service Coverage Ratio (DSCR)
- Debt-to-Equity Ratio
- Default
- Demos
- Denominator Effect
- Dilution
- Direct Investment
- Direct Secondary
- Disciplined Investing
- Discounted Cash Flow (DCF)
- Distressed Assets
- Distributed to Paid-in-Capital (DPI)
- Distribution (Distributed Capital)
- Distribution Waterfall
- Divergence Indicator
- Diversification
- Divestiture
- Dividend
- Dividend Recapitalization
- Down Round
- Downside Protection
- Downside Risk
- Drag-Along Rights
- Drawdown
- Drawn-Down Capital
- Dry Powder
- Dry-Closing
- Due Diligence
E
- Early-Stage
- Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)
- Earnings per Share (EPS)
- Earnout
- EBITDA Enhancement
- Economic Interest
- Elevator Pitch
- Elimination Entries
- Emerging Markets
- Employee Stock Ownership Plan (ESOP)
- Enterprise Value (EV)
- Entity Acquisition
- Entrepreneur
- Equity
- Equity Crowdfunding
- Equity Dilution
- Equity Financing
- Equity Multiple
- Escrow
- Exclusive Negotiating Period (ENP)
- Exit
- Exit Strategy
- Expected Return
F
- Fair Value
- Family Office
- Final Return
- Financial Acquisition
- Financial Sponsor
- Financial Statement
- Financing
- Financing Round
- First Lien Debt
- Follow-On Investment
- Follow-On Offering
- Free Cash Flow
- Friendly Acquisition
- Fund
- Fund Capitalization
- Fund Manager
- Fund Performance
- Fund Secondary
- Fund Size
- Fund Structure
- Fundamental Analysis
- Fund-of-Funds (FoF)
- Fundraising
G
H
I
- Illiquid
- Illiquidity Premium
- Implied Internal Rate of Return (IIRR)
- Income Test
- Incubator
- Indebtedness
- Indemnification
- Index Fund
- Inflation
- Information Rights
- Initial Coin Offering (ICO)
- Initial Public Offering (IPO)
- In-Kind Distribution
- Inside Round
- Institutional Investor
- Institutional Limited Partners Association (ILPA)
- Integration
- Intellectual Property (IP)
- Inter-Company Transactions
- Interest Rate
- Interim Return
- Internal Rate of Return (IRR)
- Investment Advisor
- Investment Bank
- Investment Horizon
- Investment Period
- Investment Readiness
- Investment Strategy
- Investor Giveback
- Investor Protection
- Issuer
J
K
L
- Lagging Returns
- Late Stage Venture Capital
- Lead Investor
- Lead Manager
- Lean Startup
- Letter of Intent (LOI)
- Leverage
- Leveraged Buyout (LBO)
- Limited Partner (LP)
- Limited Partnership
- Limited Partnership Agreement (LPA)
- Liquidation
- Liquidation Preference
- Liquidation Waterfall
- Liquidity
- Liquidity Event
- Load-Up Fee
- Lock-Up Period
- Long-Term Investment
- Lower Middle Market Companies
- LP Advisory Committee (LPAC)
M
- Majority-in-Interest
- Management Buyout (MBO)
- Management Company
- Management Fee
- Management Fee Offsets
- Management Rights Letter
- Management Team
- Manager
- Margin of Safety
- Market Capitalization
- Market Correlation
- Market Inefficiency
- Market Risk
- Market Size
- Material
- Materiality
- Mean Reversion
- Mentor
- Merger
- Mezzanine Financing
- Micro-Investing
- Middle Market Buyouts
- Middle Market Companies
- Minimum Commitment
- Minimum Viable Product (MVP)
- Minority Buyouts
- Minority Interest
- Minority Investment
- Modern Portfolio Theory (MPT)
- Money Manager
- Money-Weighted Return (MWR)
- Multiple on Invested Capital (MOIC)
- Multiplier Effect
- Mutual Fund
N
O
P
- Paid-in-Capital (PIC)
- Pair Trading
- Parent Company
- Parent-Subsidiary Relationship
- Pari Passu
- Participating Preferred Stock
- Passive Investment
- Passive Management
- Payment-in-Kind (PIK)
- Pay-to-Play
- Peer-to-Peer (P2P) Lending
- Pension Fund
- Performance Benchmark
- Piggyback Registration
- Pipeline
- Pitch
- Pitch Deck
- Pivot
- Placement Agent
- Platform Company
- Poor Performance
- Portfolio Company
- Portfolio Construction
- Portfolio Diversification
- Portfolio Management
- Portfolio Rebalancing
- Portfolio Return
- Portfolio Risk
- Portfolio Theory
- Post-Acquisition Integration
- Post-Acquisition Management
- Post-Money Valuation
- Pre-Emptive Right
- Preferred Return
- Preferred Shares
- Preferred Stock
- Pre-Money Valuation
- Pre-Seed
- Price Dilution
- Priced Round
- Primary Market
- Primary Offering
- Principal
- Principal Component Analysis (PCA)
- Private Equity
- Private Equity Fund
- Private Equity Secondary Market
- Private Market
- Private Placement
- Pro Forma Financial Statements
- Pro Rata
- Professional Investor
- Protective Provisions
- Prototype
- Public Market
- Public Market Equivalent (PME)
- Public-to-Private
- Purchase Agreement
- Purchase Price
- Purchase Price Adjustment
Q
R
- Real Assets
- Real Return
- Realization Multiple
- Recapitalization
- Refinancing
- Registered Investment Advisor (RIA)
- Registered Offering
- Registrable Securities
- Registration
- Registration Rights
- Regulation D
- Representations and Warranties
- Reserves
- Residual Value (RV)
- Residual Value to Paid-in Capital (RVPI)
- Restructuring
- Return of Capital (ROC)
- Return on Investment (ROI)
- Revenue Enhancement
- Reverse Break-Up Fee
- Reverse Denominator Effect
- Reward-Based Crowdfunding
- Right of First Offer (ROFO)
- Right of First Refusal (ROFR)
- Rights Offering
- Risk
- Risk Management
- Risk-Adjusted Return
- Roll-Up
- Round
- Runway
S
- Scale
- Second Lien Debt
- Second Quartile Returns
- Secondary Buyout (SBO)
- Secondary Direct
- Secondary Market
- Secondary Offering
- Secondary Purchase
- Secondaries
- Sector Focus
- Secured Debt
- Securities Act
- Securities and Exchange Commission (SEC)
- Security
- Seed Funding
- Seed-Stage
- Senior Debt
- Separation
- Series A Financing
- Series B Financing
- Series C Financing
- Series D Financing
- Share Purchase Transaction
- Shareholder
- Shareholder Structure
- Shareholders Equity
- Simple Agreement for Future Equity (SAFE)
- Sophisticated Investor
- Special Purpose Vehicle (SPV)
- Special Situations
- Spray and Pray
- Staggered Board
- Startup
- Startup Accelerator
- Startup Community
- Startup Studio
- State Securities Regulator
- Stock
- Stock Dilution
- Stock Option
- Stock Option Plan
- Stock Ownership
- Stock Purchase Transaction
- Stock Split
- Strategic Acquisition
- Strategic Investor
- Strategic Partner
- Strategy Shift
- Strike Price
- Subscription Agreement
- Subscription Line of Credit
- Subsidiary
- Suitability
- Syndicate
- Syndicate of Banks
- Synergy
T
- Tail-End Fund
- Take-Private
- Target
- Target Identification
- Tax-Advantaged
- Tender Offer
- Term
- Term Sheet
- Third-Party Due Diligence
- Time-Weighted Return (TWR)
- Top-Heavy Portfolio
- Top-Quartile Returns
- Top-Up Option
- Total Addressable Market (TAM)
- Total Return
- Total Value (TV)
- Total Value to Paid-in-Capital (TVPI)
- Trade Sale
- Tranche
- Transaction Fees
- Trust
- Trustee
- Tuck-in Acquisition
- Turnaround
- Turnaround Investments
U
V
W
Y
Z
