Officially Appointed National Mechanism

Source: esma

Non-cooperative Jurisdictions

Source: esma

An OM is a document issues by or on behalf of a private equity firm with the object of raiding money from the investment community. Sometimes referred to as a Private Placing Memorandum.

Source: ILPA

Total dollar amount raised through an IPO.

Source: ILPA

ILPA: An open-end fund, or a mutual fund, generally sells as many shares as investor demand requires. As money flows in, the fund grows. If money flows out of the fund the number of the fund's outstanding shares drops. Open-end funds are sometimes closed to new investors, but existing investors can still continue to invest money in the fund. In order to sell shares an investor generally sells the shares back to the fund. If an investor wishes to buy additional shares in a mutual fund, the investor generally buys newly issued shares directly from the fund.

GIPS: A pooled fund in which the number of investors is not fixed and the fund is open for subscriptions and/or redemptions.

Europarl: This fund does not have restrictions on the number of shares to be issued. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-ended funds also buy back shares when investors wish to sell. An investor will generally purchase shares in the fund directly from the fund itself rather than from the existing shareholders. The price at which shares in an open-ended fund are issued or can be redeemed will vary in proportion to the value of the fund's assets and will therefore directly reflect the fund's performance. Hedge funds are typically open-ended funds.

Source: ILPA, GIPS, Europarl

The number of shares set aside for future issuance to employees of a private company.

Source: ILPA

An Orderly Transaction is a transaction that assumes exposure to the market for a period prior to the Measurement Date to allow for marketing activities that are usual and customary for transactions involving such assets; it is not a Forced Transaction.

Source: IPEV

A discount from par value of a bond or debt-like instrument. In structuring a private equity transaction, the use of a preferred stock with liquidation preference or other clauses that guarantee a fixed payment in the future can potentially create adverse tax consequences. The IRS views this cash flow stream as, in essence, a zero coupon bond upon which tax payments are due yearly based on "phantom income" imputed from the difference between the original investment and "guaranteed" eventual payout. Although complex, the solution is to include enough clauses in the investment agreements to create the possibility of a material change in the cash flows of owners of the preferred stock under different scenarios of events such as a buyout, dissolution or IPO.

Source: ILPA

A financial institution (other than a bank, endowment, family office, foundation, insurance company or pension fund) managing a pool of capital by investing it across different asset classes with the purpose of generating financial returns. It may include private equity direct funds that occasionally do indirect investments, but excludes fund of funds that are a standalone option.

Source: Invest Europe

The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.

Source: ILPA

ILPA: A market for securities made up of dealers who may or may not be members of a formal securities exchange. The over-the-counter market is conducted over the telephone and is a negotiated market rather than an auction market such as the NYSE.

Esma: Over-The-Counter

Source: ILPA, Esma

Capital raised by private equity funds but as yet uninvested. This can become acute when levels of investment fail to keep pace with levels of fundraising. Overhang will tend to put upward pressure on valuations, raise suspicions that deal quality may be sacrificed in order to put money to work, and may also stretch out the fund cycle.

Source: ILPA

The economic value for which a firm has investment management responsibility. Overlay exposure is the notional value of the overlay strategy being managed, the value of the underlying portfolios being overlaid, or a specified target exposure.

Source: GIPS

A strategy in which the management of a certain aspect of an investment strategy is carried out separately from the underlying portfolio. Overlay strategies are typically designed either to limit or maintain a specified risk exposure that is present in the underlying portfolio or to profit from a tactical view on the market by changing a portfolio’s specified risk exposure.

Source: GIPS

Occurs when demand for shares exceeds the supply or number of shares offered for sale. As a result, the underwriters or investment bankers must allocate the shares among investors. In private placements, this occurs when a deal is in great demand because of the company's growth prospects.

Source: ILPA

In a rights issue, arrangement by which shareholders are given the right to apply for any shares that are not purchased.

Source: ILPA