A minority shareholder protection affording the right to include their shares in any sale of control and at the offered price.

Source: ILPA

A takedown schedule means the timing and size of the capital contributions from the limited partners of a venture fund.

Source: ILPA

The desired return on investment of private investors in early stage companies, defined in a multiple of the original investment.

Source: ILPA

Types of business combinations in which shareholders do not incur tax liabilities. There are four types-A, B, C, and D reorganizations. They differ in various ways in the amount of stock/cash that can be offered. See Internal Revenue Code Section 368.

Source: ILPA

Transparency Directive

Source: esma

An account for temporarily holding client-directed external cash flows until they are invested according to the composite strategy or disbursed. A firm can use a temporary new account to remove the effect of a significant cash flow on a portfolio. When a significant cash flow occurs in a portfolio, the firm may direct the external cash flow to a temporary new account according to the composite’s significant cash flow policy.

Source: GIPS

An offer to purchase stock made directly to the shareholders. One of the more common ways hostile takeovers are implemented.

Source: ILPA

A summary of the terms the investor is prepared to accept. A non-binding outline of the principal points which the Stock Purchase Agreement and related agreements will cover in detail.

Source: ILPA

The date defined in the LPA whereby the fund must cease operations and liquidate its investments.

Source: ILPA

Performance that is not derived from a portfolio or composite with actual assets invested in the strategy presented. Theoretical performance includes model, backtested, hypothetical, simulated, indicative, ex ante, and forward-looking performance.

Source: GIPS

The basic principle that money can earn interest, therefore something that is worth $1 today will be worth more in the future if invested. This is also referred to as future value.

Source: ILPA

A most misleading term as it actually means the exact opposite of what it suggests. Instead of calculating the actual IRR of a series of cashflows over a given period (i.e., the compound return over time), time-weighted returns calculate the geometric mean, i.e., the average of the annual percentage return in any one year.

Source: ILPA

A method of calculating period-by-period returns that reflects the change in value and negates the effects of external cash flows.

Source: GIPS

Takeover Bids Directive

Source: esma

This includes the total amount of funds available to fund managers for future investments plus the amount of funds already invested (at cost) and not yet divested.

Source: Invest Europe

A valuation measurement used to compare companies with varying levels of debt. It is calculated as follows: TEV = Market Capitalization + Interest-Baring Debt + Preferred Stock - Excess Cash

Source: ILPA

All discretionary and non-discretionary assets for which a firm has investment management responsibility. Total firm assets include assets assigned to a sub-advisor provided the firm has discretion over the selection of the sub-advisor.

Source: GIPS

The Total amount of called capital which has actually been invested in companies. In practice, this will be equal to the amount of called capital less amounts which have been used to pay fees, or which are awaiting investment.

Source: ILPA

All fees and expenses charged to the pooled fund, including but not limited to investment management fees and administrative fees.

Source: GIPS

ILPA: A phrase invented by the writer which refers to the return which an LP earns on the whole private equity allocation, as opposed to just that part of it which is at any one time invested in underlying buyout or venture companies.

GIPS: The rate of return that includes the realized and unrealized gains and losses plus income for the measurement period.

Source: ILPA,  GIPS

ILPA: A Limited Partner's total market value plus any capital distributions received.

GIPS: Residual value plus distributions.

Source: ILPA, GIPS

ILPA: The ratio of the current value of remaining investments within a fund, plus the total value of all distributions to date, relative to the total amount of capital paid into the fund to date. As defined in the current GIPS Standards (www.gipsstandards.org/standards/current/Pages/index.aspx), any recallable distributions should be included in the numerator of this ratio. Any reinvested capital (resulting from recallable distributions) should be included in the denominator. Perhaps the best available measure of performance before the end of a fund's life.

GIPS: Total value divided by since-inception paid-in capital.

Source: ILPA, GIPS

Recognizing the asset or liability on the date of the purchase or sale and not on the settlement date. Recognizing the asset or liability within three business days of the date upon which the transaction is entered (trade date, T + 1, T + 2, or T + 3) satisfies the trade date accounting requirement for purposes of the GIPS standards.

Source: GIPS

ILPA: The sale of the equity share of a portfolio company to another company.

Invest Europe: The sale of a company's shares to industrial investors.

Source: ILPA, Invest Europe

Funds flowing from investors to a company that represent a partial round or an "early close." Subsequent funds of the single round are generally under the same terms and conditions as the first tranche (or early close), however, those funding the early tranches may receive bonus warrant coverage, in consideration of the additional risk. (a French word meaning a slice or cutting).

Source: ILPA

The costs of buying or selling investments. These costs typically take the form of brokerage commissions, exchange fees and/or taxes, and/ or bid–offer spreads from either internal or external brokers. Custodial fees charged per transaction should be considered custody fees and not transaction costs. For real estate, private equity, and other private market investments, transaction costs include all legal, financial, advisory, and investment banking fees related to buying, selling, restructuring, and/or recapitalizing investments but do not include dead deal costs.

Source: GIPS

A transaction fee is a fee charged by the GP, or its related party, in relation to the purchase or sale of a portfolio company. Increasingly, transaction fees also include any directors’, monitoring, or other fees charged by the GP or its related parties in connection with portfolio companies during the holding period of the investment. The treatment of transaction fees is agreed in the fund documentation, usually requiring their offset (either wholly or in part) against the management fee. Broken deal fees (also referred to as “abort costs”) are costs incurred by the GP in pursuing a deal that does not reach completion (e.g. accountants, lawyers, due diligence costs, etc.).

Source: Invest Europe

“Transfers of interest” is a term typically used to refer to the transfer of an LP’s contractual commitment and interest in an existing fund to another LP. It may also be referred to as a secondary investment. In contrast, the term “secondary direct sale” is used to describe the sale by a fund of its interests in one or more portfolio companies to a fund managed by a different GP.

Source: Invest Europe

Stock issued by a company but later reacquired. It may be held in the company's treasury indefinitely, reissued to the public, or retired. Treasury stock receives no dividends and does not carry voting power while held by the company.

Source: ILPA

Transaction Reporting Exchange Mechanism

Source: esma

See: Restructuring/Turnaround Financing and Stages of Development.

Source: ILPA

Total value divided by since-inception paid-in capital.

Source: GIPS