![]() Angel investors usually invest as part of a financing "round" where several angels invest at the same time. An "angel investor" is a high-net-worth person who invests directly in start-up companies in exchange for equity in the company. Alternative assets are generally riskier than traditional assets, but also have the potential to provide greater returns for investors.Īlternative Investments. Alternative assets can include hedge funds, commodities, real estate, derivatives and private equity (venture capital, growth equity, buyouts, distressed debt and mezzanine financing). Alternative assets (or "alternative investments") are those which are not one of the traditional asset classes of cash, public equities and bonds. Alpha is return due to active management, while Beta relates to the returns from market exposure.Īlternative Assets. In private equity, alpha refers to the returns generated (or the "value added") by the fund manager's skill. Alpha is the amount of return that is due to the active efforts of a manager, as opposed to market forces. Also known as an "LP Advisory Committee," this is a group of Limited Partners in a fund selected by the General Partner to advise it on matters relating to the fund, most commonly valuations, conflicts of interest, fund term extensions and amendments to the limited partnership agreement.Īlpha. See the post " LP Corner: What an LP Needs to Know About Mergers & Acquisitions. ![]() The private equity firm manages this process. Add-ons can help the platform grow its product line, customer base, geography, etc. An "add-on", "tuck-in" or "bolt-on" acquisition is one where a private equity portfolio company (called the "platform company" or "platform") acquires another company to help the platform company grow. See also the definitions for "Asset Purchase Transaction", "Stock Purchase Transaction." and "Add-On Acquisition." See the post " LP Corner: What an LP Needs to Know About Mergers & Acquisitions."Īdd-on Acquisition. An acquisition differs from a merger in that a merger is the voluntary combination of two companies to form a new combined entity. In private equity, a fund will acquire a company using a combination of equity and debt for the purchase price. In a financial acquisition, a financial buyer (such as a private equity fund) acquires a company in order to improve its performance and later sell the company at a profit. In a strategic acquisition, an operating company acquires another company to advance a strategy (expand product/service offerings, expand a customer base, acquire technology or talent, to name a few). An acquisition can either be strategic or financial. An acquisition also occurs when a purchaser purchases substantially all of the assets of a company. An acquisition is the purchase of fifty percent (50%) or more of a company's outstanding voting stock. ![]() See also Qualified Client, Qualified Purchaser and Qualified Institutional Buyer.Īcquisition. Here's a link to the statutory language (found in §230.501(a)). Many companies restrict private stock offerings to accredited investors. Essentially, an accredited investor is a sophisticated investor that has a certain net worth or meets certain income tests. An "accredited investor" is a person or entity that meets the requirements of Rule 501 of Regulation D of the Securities Act of 1933, as amended. ![]() There are many accelerator programs in the US, but one well-known accelerator is Y Combinator.Īccredited Investor. ![]() Accelerators then "graduate" these companies by having a "demo day" where the companies present to potential investors. Generally, an accelerator will provide the startup with office space, some capital in exchange for equity in the company (or options to purchase equity), and assistance for an established period of time (usually a few months). An accelerator is a program to help a start-up company grow to be a successful company. ![]()
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