Naked short selling is a case of short selling without first arranging to borrow the shares. If the stock is in short supply, finding shares to borrow can be difficult. The seller may also decide not to borrow the shares because of the lending costs. This practice allows an unlimited number of shares to be sold short with the result that a company's share price can be driven down faster than by regular short selling. In 2008 it was argued that naked short selling contributed to the rapid demise of Lehman Brothers and Bear Stearns. As in short selling, naked short selling, notably of shares of financial institutions, faces tightened legislation in view of the recent crisis but rules vary from country to country.

Source: europarl

A type of anti-dilution mechanism. A weighted average ratchet adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to new investor B at a price lower than the price investor A originally received. Investor A's preferred stock is repriced to a weighed average of investor A's price and investor B's price. A narrow-based ratchet uses only common stock outstanding in the denominator of the formula for determining the new weighed average price.

Source: ILPA

The National Association of Securities Dealers. Any mandatory association of brokers and dealers in the over the counter securities business. Created by the Maloney Act of 1938, an amendment to the Securities Act of 1934.

Source: ILPA

An automated information network which provides brokers and dealers with price quotations on securities traded over the counter.

Source: ILPA

National Competent Authorities

Source: esma

An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.

Source: ILPA

IPEV: NAV of a Fund is the amount estimated as being attributable to the investors in that Fund on the basis of the Fair Value of the underlying Investee Companies and other assets and liabilities.

ILPA: NAV is calculated by adding the value of all of the investments in the fund and dividing by the number of shares of the fund that are outstanding. NAV calculations are required for all mutual funds (or open-end funds) and closed-end funds. The price per share of a closed-end fund will trade at either a premium or a discount to the NAV of that fund, based on market demand. Closed-end funds generally trade at a discount to NAV.

Source: IPEV, ILPA

Also called the cost of carry or, simply, carry, the difference between the cost of financing the purchase of an asset and the asset's cash yield. Positive carry means that the yield earned is greater than the financing cost; negative carry means that the financing cost exceeds the yield earned.

Source: ILPA

The net earnings of a corporation after deducting all costs of selling, depreciation, interest expense and taxes.

Source: ILPA

The dollar-weighted internal rate of return, net of management fees and carried interest generated by an investment in the fund. The return considers the daily timing of all cash flows and cumulative fair stated value, as of the end of the reported period.

Source: ILPA

Management fee net of management fee offsets.

Source: ILPA

An approach used in capital budgeting where the present value of cash inflow is subtracted from the present value of cash outflows. NPV compares the value of a dollar today versus the value of that same dollar in the future after taking inflation and return into account. A firm or project's net contribution to wealth. This is the present value of current and future income streams, minus initial investment.

Source: ILPA

The gross-of-fees return reduced by investment management fees.

Source: GIPS

The original round of financing in a company. Venture-backed firms typically receive further Follow-on Financing as they grow and develop in portfolios. Also known as a first-time transaction.

Source: ILPA

A stock or bond offered to the public for the first time. New issues may be initial public offerings by previously private companies or additional stock or bond issues by companies already public. New public offerings are registered with the Securities and Exchange Commission.

Source: ILPA

The typical label for any newly organized company, particularly in the context of a leveraged buyout.

Source: ILPA

A no shop, no solicitation, or exclusivity, clause requires the company to negotiate exclusively with the investor, and not solicit an investment proposal from anyone else for a set period of time after the term sheet is signed. The key provision is the length of time set for the exclusivity period.

Source: ILPA

A "no fault divorce" clause permits investors at a time after the final closing date, to remove the general partner of a fund and either terminate the Partnership or appoint a new general partner. This clause covers situations where the general partner has not defaulted or breached the terms and conditions of the Limited Partnership Agreement. Either an ordinary consent or a special consent may be required to effectuate the removal of the general partner and this clause will usually be subject to the general partner receiving compensation for its removal.

Source: ILPA

An investor not considered accredited for a Regulation D offering. (Accredited Investor).

Source: ILPA

An agreement often signed by employees and management whereby they agree not to work for competitor companies or form a new competitor company within a certain time period after termination of employment. Governed by state law.

Source: ILPA

The New York Stock Exchange. Founded in 1792, the largest organized securities market in the United States. The Exchange itself does not buy, sell, own or set prices of stocks traded there. The prices are determined by public supply and demand. Also known as the Big Board.

Source: ILPA