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Legal Vocab Flashcards

1
Q

Terms included in an LPA

A
  • how long are we investing
  • what happens when we call capital
  • Distribution for tax purposes
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2
Q

FOIA

A

The Freedom of Information Act (FOIA) provides public access to all federal agency records except for those records (or portions of those records) that are protected from disclosure by any of nine exemptions or three exclusions (reasons for which an agency may withhold records from a requester).

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3
Q

Joinder

A

An agreement joining a person as party to another agreement as if such person was an original party to such agreement. Joinder agreements are commonly used when new stockholders or LLC members receive equity and are made party to an existing stockholders’ agreement or LLC agreement.

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4
Q

Asset Classes

A

Private Equity, Private Credit, Infrastructure, Real Estate

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5
Q

Alternative Investments

A

Derivatives, Futures, foreign currency

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6
Q

Close ended funds

A

professional managed deversified fund comprising a fixed number of shares, raising capital via IPO. Price determined by market demand rather than underlaying valuations of companies. Traded at any time markets are open

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7
Q

Open-ended funds

A

professional managed deversified fund traded at certain times of day determined by fund manager. Unlimited shares. Prices are fixed once per day at the NAV. The value is the funds assets minus its liabilities

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8
Q

NAV

A

net asset value = assets minus liabilities

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9
Q

PE Tiers AA and A

A

KKR, The Carlyle Group, Bain Capital, Warburg Pincus, BlackRock, Providence Equity Partners, Temasek, Cerberus Capital Management, Fortress Investment Group, Vista Equity Partners, HarbourVest, Investcorp, Macquarie, SoftBank, Advent International, Adams Street Partners, Hamilton Lane

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10
Q

PE Tier B

A

: H.I.G. Capital, Platinum Equity, Levine Leichtman Capital Partners, Thoma Bravo, L Catterton, TA Associates, Berkshire Partners, EIG Global Energy Partners, GI Partners, Oak Hill Capital Partners, Siguler Guff, Capital Dynamics (fund of funds), Genstar Capital, Battery Ventures, Bregal Investments, Norwest Venture Partners, Wellington Private Equity

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11
Q

Sovereign Debt

A

debit issues by national government in a foreign currency

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12
Q

Private Credit AA

A

–Ares, Oaktree Capital Management, Bain Capital Credit, KKR Credit, BlackRock, King Street Capital Management, CIFC Asset Management, Cerberus Capital Management, Fortress Investment Group, Centerbridge Partners

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13
Q

Private Credit B/C

A

Crestline, Owl Rock, Monroe Capital, Varagon Capital Partners, Onex Credit, Vista Credit Partners

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14
Q

Merchant Bank

A

bank invests own money in buying and running businesses. Require a great deal of capital that is tied up for extended periods

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15
Q

Commercial and consumer banks

A

take deposits and make loans

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16
Q

Investment banks

A
  • sell services advice on m and a and help raise money by selling stocks and bonds.
    • Trade stocks and bonds for customers and own accounts.
    • Most stakes are liquid meaning they can be sold quickly. But If they can’t they need a cushion to cover losses
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17
Q

Basis point

A

1/100 of a percent

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18
Q

Capital Call

A

LPs don’t put in all money up front. Just commit. When GP needs money issue the capital call

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19
Q

Management Fee

A

specific % of the fund collected each year regardless of how much capital has been deployed

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20
Q

Carried Interest

A

fund manager takes 20% of any gains on investment when they are sold

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21
Q

SPAC

A

special purpose acquisition company, also known as a “blank check company”, is a shell corporation listed on a stock exchange with the purpose of acquiring a private company, thus making it public without going through the traditional initial public offering process.

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22
Q

Multi-strategy asset managers

A

Carlyle Group, Bain Capital, Warburg Pincus, Blackrock

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23
Q

Sovereign Wealth Funds

A

State owned investment fund comprised of pools of money derived from State’s reserves (e.g. Abu Dhabi Investment Authority, Temasek (Singapore)

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24
Q

Pension funds

A

(aka superannuation funds in some countries) plan or scheme that provides retirement income. Typically pension funds can’t invest directly in private companies and instead invest in GPs and LPs

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25
Q

VC

A

tend not to be a target becuase either don’t sign NDAs or use their standard (no negotiation)

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26
Q

Growth equity

A

sit in between VC and Private equity, investing in companies with proven, albeit relatively short duration of economics)

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27
Q

secondary funds

A

Funds that buy and sell limited partnership interests

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28
Q

Bulge bracket banks

A

the biggest iBanks (e.g. JPMC, Barclays, BofA) vs. mid-market or boutique

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29
Q

Dry Powder

A

undeployed capital raised by a GP that they still need to invest

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30
Q

GP or LP Clawback

A

This is a common term of the private equity agreement. To the extent that the general partner receives more than its fair share of profits, as determined by the carried interest, the general partner clawback holds the individual partners responsible for paying back the limited partners what they are owed.

31
Q

Margin Call

A

A margin call occurs when the value of an investor’s margin accountfalls below the broker’s required amount. An investor’s margin account contains securities bought with borrowed money (typically a combination of the investor’s own money and money borrowed from the investor’s broker). A margin call refers specifically to a broker’s demand that an investor deposit additional money or securities into the account so that it is brought up to the minimum value, known as the maintenance margin. A margin call is usually an indicator that one or more of the securities held in the margin account has decreased in value. When a margin call occurs, the investor must choose to either deposit additional funds or marginable securities in the account or sell some of the assets held in their account.

32
Q

MFN Election

A

A most favoured nation (MFN) clause entitles an investor to have visibility of side letter entitlements of other investors in the private equity fund and, in certain circumstances, allows such investor to elect to benefit from those entitlements

33
Q

Compendia

A

collection of concise but detailed information about a particular subject, especially in a book or other publication.

34
Q

performance fee

A

a payment made to an investment manager for generating positive returns

35
Q

Tech Incubator

A

typically at large financial institutions , they focus on introducing new technology innovation that generates positive ROI

36
Q

Reliance Letter

A

with respect to any opinion, an executed letter from the issuer of such opinion to the Secured Parties providing that the Secured Parties are permitted to rely on such opinion as if such opinion was addressed to them.

37
Q

Non-reliance Clause

A

No Reliance clause in an agreement stipulates that a party does not rely on any representations or statements by the other party in the execution of the agreement other than those contained in the agreement.

38
Q

Engagement Letter

A

An engagement letter is a written agreement that describes the business relationship to be entered into by a client and a company. The letter details the scope of the agreement, its terms, and costs. The purpose of an engagement letter is to set expectations on both sides of the agreement.

39
Q

Disclosure Schedule

A

Disclosure schedules provide supplemental, factual information that support each of the representations (an assertion of facts) and warranties (a promise about the future) made by the seller, such as lists of stockholders, important contracts, intellectual property, employee benefit plans, outstanding debts, and other material matters of the selling company. Disclosure schedules also provide detail on any exceptions to a warranty made in a merger or acquisition agreement. For example, an M&A agreement may state that the business is not involved in any litigation or court cases, except as set forth on the disclosure schedules. Details of the exception—in this example, an outstanding court case—would then be disclosed in the disclosure schedules.

40
Q

documents addressed by document processing

A
  • Buy/sell side NDAs
  • Joinders
  • Reliance and non-reliance letters
  • Vendor Contracts
  • Engagement letters
  • Purchase Agreement Schedules
  • Real Estate documents
41
Q

Documents covered by document abstracting

A
    • Buy/sell side NDAs
  • Joinders
  • Reliance and non-reliance letters
  • Vendor Contracts
  • Engagement letters
  • Purchase Agreement Schedules
  • Real Estate documents
    Credit Agreements–a legally-binding contract documenting the terms of a loan agreement;
  • Customer contracts
  • Purchase agreements
  • Operating agreements
  • Term Sheets
  • Credit documents
42
Q

documents covered by insight

A
  • LPA
  • Side letters
  • Purchase agreements
  • Credit agreements
  • Real-estate docs
  • service agreements
43
Q

Notice Period

A

The period of notice required to be given under a term (whether express or implied and, if express, whether oral or in writing) of a contract

44
Q

Restrictive Covenant

A

A restrictive covenant is a provision in a real property conveyance that limits the grantee’s use of the property. .

45
Q

altitude at which documents apply

A

Above the fund, fund level, below the fund

46
Q

PPM

A

Private placement memorandum– (an overview of the GPs track record)

47
Q

Sub-docs

A

(subscription agreement), contract wherin LP commits capital to the fund

48
Q

DDQ

A

Due Diligence Questionnaire

49
Q

Form-D

A

at outset of any launch, you must file a form D–a document related to regulation D of the SEC. When form D is field, that means we’re going to market. Great time to hit on Insight. You can get email notifications on this

50
Q

Deal Professionals

A

Analysts, Associates, VPs, MDs, Principles, Partners, Founders

51
Q

ESG

A
  • Environmental, Social, and Governance. Investors are increasingly applying these non-financial factors as part of their analysis process to identify material risks and growth opportunities. … This guide takes fiduciary duty, externalities, disclosures, and other important ESG issues into account.
    • ESG terms in side letters don’t have many teeth. This is moving to more concrete and impactful.
52
Q

Jurisdiction

A

Jurisdiction is defined as the power or authority to decide legal cases. An example of jurisdiction is a court having control over legal decisions made about a certain group of towns

  • Our attorneys are fully licensed
  • Not licensed in a specific jurisdiction is not a problem because, based on the nature of our agreements, no need to apply jurisdiction
53
Q

Ontra Service Levels

A
  • Standard Service level–next business day

- Rush Service Level–same day. Comes at a 50% premium

54
Q

Privilege

A

A particular benefit, advantage, or Immunity enjoyed by a person or class of people that is not shared with others. A power of exemption against or beyond the law. It is not a right but, rather, exempts one from the performance of a duty, obligation, or liability.

55
Q

ML at Ontra

A

generates response for the following terms: stand stills, non-solicitation provision, jurisdiction

56
Q

standstill

A

A standstill agreement is a contract that contains provisions that govern how a bidder of a company can purchase, dispose of, or vote stock of the target company. A standstill agreement can effectively stall or stop the process of a hostile takeover if the parties cannot negotiate a friendly deal.

57
Q

PPM

A

Also known as an Offering Memorandum or “PPM”. A document that outlines the terms of securities to be offered in a private placement. Resembles a business plan in content and structure. A formal description of an investment opportunity written to comply with various federal securities regulations. A properly prepared PPM is designed to provide specific information to the buyers in order to protect sellers from liabilities related to selling unregistered securities. Typically PPMs contain: a complete description of the security offered for sale, the terms of the sales, and fees; capital structure and historical financial statements; a description of the business; summary biographies of the management team; and the numerous risk factors associated with the investment. In practice, the PPM is not generally used in angel or venture capital deals, since most sophisticated investors perform thorough due diligence on their own and do not rely on the summary information provided by a typical PPM.

58
Q

DDQ

A

A DDQ stands for due diligence questionnaire. An organization sends out a due diligence questionnaire to grasp the vendor’s process, how the vendor will comply with their standards and handle their needs.

59
Q

ERISA

A

Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.

60
Q

Drawdown

A

A drawdown refers to how much an investment or trading account is down from the peak before it recovers back to the peak. Drawdowns are typically quoted as a percentage, but dollar terms may also be used if applicable for a specific trader. Drawdowns are a measure of downside volatility.

61
Q

Strategic Buyer

A

an operating company

62
Q

Financial Sponsor

A

PE Firm

63
Q

NDA Terms

A
  • What sensitive information will be provided
  • Representatives–buyers will direct their representatives (not ensure) but will also be responsible for breaches of the NDA. Buyers may ask representative to sign a joinder
  • Co-bidding
  • Locking up debt sources
  • non-circumvent
  • Acquiring a stake in public company
  • Non-solicit
  • no contacts (contact target’s customers)
  • Non-compete
64
Q

Commercially reasonable standard of care

A

Efforts would protect the information that is reasonable–what a reasonable business would do under normal circumstances. Less stringent than best efforts

65
Q

A fact pattern or fact situation

A

a summary of the key facts of a particular legal case, presented without any associated discussion of their legal consequences

66
Q

Closing set

A

all the documents tied to a deal

67
Q

Form PF

A

Form PF, adopted in 2011, is the confidential reporting form the SEC requires many SEC-registered private fund investment advisers to private funds to complete on a quarterly basis.

68
Q

Advisers Act

A

regulates the activity of private investment advisers.

69
Q

Proposed amendments to Form PF

A

Create new reporting requirements for certain events for large hedge fund and private equity advisers
Lower the reporting threshold for large private equity advisers
Update reporting requirements for large private equity advisers

70
Q

SMA

A

Separate Managed Accounts–Between these ends of the spectrum, however, is the growing universe of separately managed accounts (SMA) targeted toward wealthy (but not necessarily ultra-wealthy) individual investors. Whether you refer to them as “individually managed accounts,” “separate account,” or “separately managed accounts,” these individual-oriented managed accounts have gone mainstream.

71
Q

AML and KYC

A

Anti-money laundering and Know Your customer

72
Q

LPAC

A

Limited Partner Advisory Committee–LPAC is composed of a representative (3 to 5) group of investors (referred to as limited partners or “LPs”) that are appointed by the GP.LPAC helps handle more sensitive matters that the GP faces to ensure that they are managed to the comfort of the investors (e.g. conflicts of interest, Waivers of LPA restrictions, General oversight)

73
Q

RIA

A

Registered Investment Advisor

74
Q

Originator

A

The Ontra client that works with an Ontra Attorney

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