Stage knowledge Flashcards
retain and understand information
Welke soorten bedrijfsovernames zijn er ?
- Aandelenfusie
- openbaar bod
- bedrijfsfusie
- contractuele fusie
- juridische fusie
wat is een NDA ?
Non-disclosure agreement : voorwaarden voor de informatieverstrekking over de doelvennootschap in de Due-dilligence fase en reguleert de vertrouwelijkheid van de onderhandelingen en de transactie zelf
wat is turboliquidatie ?
het afwikkelen van een rechtspersoon zonder baten en lasten
kentering
omslag, omkeer , ombuiging
Pre seed round
friends and family round to turn an idea into a viable business
seed funding
first official equity funding into starting companies to provide funds for their first steps (market research & product development)
Series A funding
VC firms funding round where typically 2-15 million gets raised for companies with great ideas and strong strategies. Investors recieve preferred stock and less than 10% of seed funded companies make it to this stage
Series B funding
meant to take a business to the next level, to expand market reach and to grow the company to meet higher levels of demand. 35-51 million.
Series C funding
most commonly the last external equity funding.
- utilized to boost valuation in anticipation of an IPO
- meant for additional funding to:
- develop products,
- expand into new markets or
- acquire other companies.
goal is to recieve more than double the invested money back
hedge funds, investment banks and PE-funds join the VC investors because the company is established and there is heightend potential for profit.
100’s of millions recieved.
syndication
group of investors that pool capital in SPV’s to invest in startups on a deal by deal basis. allowes investors to take on deals with less captial that they wouldnt be able to do individually. good way to diversify portfolio
Special purpose vehicle (SPV)
Subsidiary created by parent company to isolate financial risk. have been used for fraud/accounting scandals in the past
unit economics
the direct revenues and costs of a particular business measured on a per-unit basis, where a unit can be any quantifiable item that brings value to the business
founder vesting
A vesting clause ensures that the founders stay committed to the business for a certain period after the investment.
During this vesting period, the founders “earn” or vest their shares. If they leave before the end of the vesting period, they typically lose (part of) their shares. In early-stage investments, this is typically 4 or 5 years.
Participating Preferred stock
type of preferred stock that gives the holder the right to receive dividends equal to the customarily specified rate that preferred dividends are paid to preferred shareholders, as well as an additional dividend based on some predetermined condition. Participating preferred stock can also have liquidation preferences upon a liquidation event.
Tag along rights
These rights allow a minority shareholder to sell their share if a majority shareholder is negotiating a sale for their stake
drag along rights
empower majority shareholders to force—or “drag”—minority shareholders into a sale, potentially against their wishes.
exit waterfall analysis
tool used by companies and their investors to model how the proceeds of an exit would be distributed among shareholders based on the terms of a company’s operating agreement
This liquidation event payout structure is called an exit waterfall because of how distributions spill over from one class of shareholder to the next, moving their way down the cap table.
Milestone funding
funding arrangement where funds are released to the startup as it achieves specific, pre-agreed milestones.
Swamping rights
This refers to provisions usually contained in a company’s articles of association which allow the private equity or venture capital fund investor enhanced voting rights in certain specified default situations, eg the material failure by a company to reach its budget targets or a material breach of its financing documents and/or subscription and shareholders agreement/investment agreement.
anti-dilution provision
a clause in an investment agreement designed to safeguard investors from the dilution of their ownership percentage when new shares are issued at a price lower than what they initially paid
DSCR
analytics method to determine if a company can adequately manage its borrowing costs -> net operating income : total debt
distressed asset
the cause may be less obvious and the potential repercussions much more challenging—or impossible—to identify and quantify.
pre money valuation
Valuation of the business before investment
low valuation means larger dilution of equity by investor
liquidation preferences
determines the order in which proceeds are payed out in case of a liquidity event (see exit waterfall)
forms of investement particpation
non-participating
participating preferred “double dip”
participation cap
Conditions precedent
conditions that have to be fulfilled before a deal is complete
Sinking fund
Specific fund set up for large future obligations (large expenses or loan repayments)
Loan to value
loaned amount as a percentage of the value of the purchased asset
Gearing
degree to which a companies operations are funded by lenders vs shareholders -> debt to equity ratio
downside protection
techniques to mitigate or prevent a decrease in the value of an investment
CAPEX
capital expenditures-> a companies spending on physical assets
cannot be deducted from income for tax purposes
Business interruption insurance
insurance against monetary losses during periods of suspended operations when a covered event causes physical damage
L-TIP
(Long term investment plan)
Company policy that rewards employees for reaching specific goals that lead to increased shareholder value
- 401 K
- Vesting
- Stock options
Put
insurance on a stock. insures against lower stock price than the strike-> agreed upon price
form of downside protection
institutional buy out
institutional investors take an controlling interest in the business
leveraged buy out
newco incurs debt banked against its assets to buy out
Management buy out
Most typical type of PE-transaction:
- existing management team buys all or part of the business alongside a PE-house
management buy in
external managers take over the company with financing from PE-investors
Payement in kind
instrument that pays interest or dividends to investors of bonds, notes or preffered stock with additional securities or equity instead of cash
secondary buy out
PE-investor sells control of portfolio company to secondary Private equity fund
sweet equity
options
performance rights
rights to further shares
MIP-> meant to further increase the value of managament equity relative to other shareholders
Closing accounts
the determination of the purchase price based on the financial statements of the target prepared as of the day of share transfer
General Partner
one of two or more investors who jointly own a business that is structured as a partnership, and who assumes a day-to-day role in managing it.
Limited Partner
A partnership made up of two or more partners in which limited partner does not partake in managing the business
limited liability but also limited share of the profits
carried interest
share of profits earned by general partners of private equity paid out after the fund achieves a minimum return -> hurdle rate
hurdle rate
the lowest rate of return a project or investment must achieve before a manager or investor deems it acceptable. It’s important when companies or investors make important decisions like pursuing a specific project. Riskier projects generally have higher hurdle rates than those with less risk.
