LDC Backing ambition PRIVATE EQUITY TERMINOLOGY Private equity. Made clearer. A – E F – J K – O P – T U – Z Acquisition finance Funding which is deployed to support an acquisition or series of acquisitions, which can be in the form of debt or equity. Alternative assets A general term to describe non-traditional types of asset class, including private equity. Buy and build A process by which a company achieves growth in size and scale – in products/services, customers or geographies – through a programme of multiple acquisitions. This is common in fragmented industry sectors where there is an opportunity to consolidate. Read more. Buyout Any investment where a company or subsidiary is acquired from its shareholders. See also ‘management buyout’ and ‘secondary buyout’. Capital gains The difference between an asset’s purchase and sale price, where the sale price is higher. Capital gains are taxed at a lower rate than other forms of income. Captive fund A venture capital or private equity investor which is owned by a larger financial institution, such as a bank. Carve Out A corporate carve out enables a business to split away from its parent company, freeing up its management team and allowing them to move in a new direction. Often, a private equity firm will work directly with the existing management team to buy the business and help take it forward. Read more. Due diligence DD for short, this is a process undertaken by potential investors – often using third parties – to analyse different areas and functions of a business and its marketplace prior to any transaction. Areas of DD include financial, commercial, insurance, IT, legal and management. In some transactions, vendor due diligence is prepared as part of the process and provided to potential investors. EBITDA Earnings before Interest, Taxes, Depreciation and Amortisation. This is a measure of underlying profitability – used frequently by private equity – which shows the true level of cash generation within a business after these elements are removed. Different to EBIT and PTP. Equity An ownership interest in a company, usually in shares or share options. Equity release A process by which an owner or owners of a business convert some of their shareholding into cash by securing third party investment. Exit strategy A plan which sets out how the investor and management team will sell their shareholdings in order to generate maximum return. A strategy can be driven by multiple factors, from the investment climate to industry trends to the types of likely buyers that exist for a business. Typical exit strategies involve ‘trade sales’, ‘secondary buy-outs’ and ‘initial public offerings’. A – E F – J K – O P – T U – Z BACK TO TOP What is private equity? Private equity helps you open up growth opportunities for your business without losing control of the decision-making. READ MORE Why LDC? More than 600 management teams have chosen LDC’s flexible approach to private equity over the past 35 years. READ MORE Get in touch to see if we can work together First name* Last name* Telephone number Sign up for LDC news and insights First name* Last name* Email* Company Name* LDC (Managers) Ltd. One Vine Street London W1J 0AH United Kingdom PRIVACY STATEMENT TERMS & CONDITIONS MODERN SLAVERY Registered in England and Wales no. 2495714. Authorised and regulated by the Financial Conduct Authority no. 147964. Part of Lloyds Banking Group. Copyright © 2021 LDC (Managers) Ltd Website by Mr B & Friends You can manage your preferences and opt-out if you wish. Cookie settingsACCEPT