Private Equity for Exam 2 Flashcards
One of the most common reasons that small/ new businesses fail is:
lack of capital
All investment capital represents ________________________________, businesses or government entities
accumulated wealth of individuals
if business and governmental entities have funds that do not need ___________ for ten years or so and the funds are considered ________________ they may be made available for angel funding, venture capital, or private equity
liquidity; risk capital
What is it called when wealthy individuals make direct investments into private companies
angel investing
_______________ typically refers to funding made available to start-up and early stage companies
venture capital
____________ usually refers to the funding for middle to later stage companies and included equity funds that purchase entire companies
private equity
a __________________ invests with the intent of selling the investment in an IPO or in a sale of the company to an acquirer
venture capital fund
a ______________________ may buy part of all of a company with the intent of optimizing the operation of the company and selling it to somebody else at a higher price
OR
may generate a return on their investment from taking distributions of the profit of the company
private equity fund
what is it called when a private equity transaction involves a PE firm putting up some of its own capital and then borrowing more money to complete the transaction
leveraged buyout (LBO)
Why pension plans as a source of venture capital and private equity
they are very large and have very long investment horizons
______________ term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care
due diligence
What does the acronym EBITDA stand for
Earnings before interest, taxes, depreciation and amortization
what is EBITDA
widely used measure of corporate profitability
