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A minority shareholder protection affording the right to include their shares in any sale of control and at the offered price.
A takedown schedule means the timing and size of the capital contributions from the limited partners of a venture fund.
The desired return on investment of private investors in early stage companies, defined in a multiple of the original investment.
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.
An offer to purchase stock made directly to the shareholders. One of the more common ways hostile takeovers are implemented.
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.
The date defined in the LPA whereby the fund must cease operations and liquidate its investments.
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.
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.
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