private equity
Non-public company capital
Private equity refers to investment capital that is not traded on public stock exchanges, typically used to acquire ownership stakes in companies or to fund business ventures.
Private equity firms pool money from wealthy investors and institutions to buy companies, restructure them, and sell them later for profit.
The company was taken private through a private equity buyout.
The term often carries connotations of aggressive cost-cutting and layoffs, though proponents argue it creates value by improving underperforming businesses.
Debt-funded acquisition
- leveraged buyoutDebt-funded corporate acquisition
- management buyoutStaff acquires their company
- acquisitionAct of obtaining something
- takeoverAssuming command of something
carve-out · spin-off · tender offer · controlling interest · majority stake · bolt-on · add-on · roll-up
Pre-transaction reasonable care
- valuationAssessment of monetary worth
- auctionCompetitive public sale
- biddingOffering prices or obeying
- letter of intentPreliminary agreement expressing commitment
SPA · purchase agreement · closing · exclusivity · representation · warranty · indemnification · escrow
Reserved money supply
- dry powderWaterless granular material
- drawdownReduction over time
- general partnersFully liable business co-owners
- LPExtended vinyl recording
GP · institutional investors · pension funds · endowments · vintage year · fundraising · high net worth
Raising capital through borrowing
- mezzanineIntermediate story between floors
- covenantBinding formal pledge
- refinancingReplacing a loan
- recapitalizationRestructuring corporate capital composition
Discount rate zeroing NPV
- multipleConsisting of many parts
- carryMove while supporting
- hurdle rateMinimum required return percentage
- distributionAllocation across recipients
DPI · alpha · outperformance · value creation · exit · J-curve · waterfall · clawback
Making things more useful
- EBITDAProfit before major deductions
- cost reductionDecreasing expenditure amounts
- turnaroundShift in opposite direction
- restructuringRearranging an existing framework
professionalization · board seat · hands-on · management team · co-investment
LBO
Debt-funded acquisition
- leveraged buyoutDebt-funded corporate acquisition
- management buyoutStaff acquires their company
- acquisitionAct of obtaining something
takeover · carve-out · spin-off · tender offer · controlling interest · majority stake · bolt-on · add-on · roll-up · consolidation
due diligence
Pre-transaction reasonable care
- valuationAssessment of monetary worth
- auctionCompetitive public sale
- biddingOffering prices or obeying
letter of intent · SPA · purchase agreement · closing · exclusivity · representation · warranty · indemnification · escrow
fund
Reserved money supply
- dry powderWaterless granular material
- drawdownReduction over time
- general partnersFully liable business co-owners
LP · GP · institutional investors · pension funds · endowments · vintage year · fundraising · high net worth
debt financing
Raising capital through borrowing
- mezzanineIntermediate story between floors
- covenantBinding formal pledge
- refinancingReplacing a loan
recapitalization · term loan · junk bonds · high-yield · collateral
IRR
Discount rate zeroing NPV
- multipleConsisting of many parts
- carryMove while supporting
- hurdle rateMinimum required return percentage
distribution · DPI · alpha · outperformance · value creation · exit · J-curve · waterfall · clawback · catch-up
value creation
Making things more useful
- EBITDAProfit before major deductions
- cost reductionDecreasing expenditure amounts
- turnaroundShift in opposite direction
restructuring · professionalization · board seat · hands-on · management team · co-investment
- assetsproperty, cash, money, investments, bank accounts
- financebank, CFO, banks, controller, finance
- industriesbusiness, factories, education, health, supply chain
- fundingfunding, grant, loan, grants, venture capital
- high-paid careerssurgeon, neurosurgeon, anesthesiologist, cardiologist, CEO
- corporate financecost of capital, investment, capital markets, NPV, debt financing
private equitypublic markets
Shared commercial gathering spaces
exchange-traded funds · stock market · mutual funds · index funds · NYSE
private equitybonds
Ties that unite
fixed income · government securities · corporate bonds · public debt · debt financing
private, equity, privately, equitable, inequity, inequitable, equitably, privatization, privatized