OWNERSHIP EQUITY

Ownership Equity in accounting terms, ownership equity is the remaining interest in all assets after all liabilities are paid. If valuations placed on assets do not exceed liabilities, negative equity exists.This definition is most helpful when a business is not paying its bills and gets liquidated, wound up, put into receivership or bankruptcy. Then, creditors have the first claim on assets, and ownership equity is the last or residual claim against assets, paid only after all other creditors are paid. In such a case, creditors may not get enough money to pay their bills, and nothing is left over to reimburse owners' equity. Thus owners' equity is reduced to zero. Ownership equity is also known as risk capital, liable capital and equity.

STOCK MARKET

A Stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately.The term 'the stock market' is a concept for the mechanism that enables the trading of company stocks (collective shares), other securities, and derivatives. Bonds are still traditionally traded in an informal, over-the-counter market known as the bond market. Commodities are traded in commodities markets, and derivatives are traded in a variety of markets (but, like bonds, mostly 'over-the-counter').

PRIVATE EQUITY FIRMS

Private equity firms typically manage a family of fund vehicles which are used to make investments in companies or other assets. These funds can be structured in a number of different ways although the most common form for an institutional private equity fund is either the Limited Partnership (LP) or the Limited Liability Company (LLC).private equity firms includE leveraged buyout, venture capital, distressed, real estate, growth capital and mezzanine capital focused groups.

LEVERAGE BUYOUT

A Leverage buyout (LBO) or highly-leveraged transaction (HLT), or "bootstrap" transaction) occurs when a financial sponsor gains control of a majority of a target company's equity through the use of borrowed money or debt.It is a strategy involving the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans, in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital. In a LBO, there is usually a ratio of 70% debt to 30% equity, although debt can reach as high as 90% to 95% of the target company's total capitalization. The equity component of the purchase price is typically provided by a pool of private equity capital.

VENTURE CAPITAL

A Venture capital is a type of private equity capital typically provided by professional, institutionally-backed outside investors to new, growth businesses. Generally made as cash in exchange for shares in the investee company, venture capital investments are usually high risk, but offer the potential for above-average returns.

VENTURE CAPITAL FUND

A Venture capital fund is a pooled investment vehicle (often a partnership) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships.

GROWTH CAPITAL

Growth capital is a very flexible type of financing. The money borrowed under a growth capital line of credit can be used for any corporate purposes. There are no requirements to provide invoices or other backup material when borrowing under this type of facility, so administration is simplified as well. Growth capital can be a beneficial way to extend a company’s runway between rounds of financing. The extra time can be used to complete additional milestones that will raise the company’s valuation, or as insurance to ensure that all intended milestones are successfully accomplished.

ANGEL INVESTOR

An Angel investor is an affluent individual who provides capital for a business start-up, usually in exchange for ownership equity. Angels typically invest their own funds, unlike venture capitalists, who manage the pooled money of others in a professionally-managed fund. However, a small but increasing number of angel investors are organizing themselves into angel networks or angel groups to share research and pool their investment capital.

MEZZANINE CAPITAL

A Mezzanine capital (or mezzanine debt) is a broad financial term that refers to unsecured, high-yield, subordinated debt or preferred stock that represents a claim on a company's assets that is senior only to that of a company's shareholders. Mezzanine capital is a more expensive financing source for a company than secured debt or senior debt. It is more expensive because of the increased credit risk, i.e. in the event of default, mezzanine debt is less likely to be repaid in full. It is only secured by the equity of the company, and not the company's tangible assets (e.g., property, cash or accounts receivable). In compensation for the increased risk, mezzanine debt holders will require a higher interest payment or an equity stake in the company. However, it is a cheaper source of financing than equity as the current equity holders achieve less dilution.

LIMITED PARTNERSHIP

A Limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs).

GENERAL PARTNERSHIP

In the commercial and legal parlance of most countries, a General partnership or simply a Partnership refers to an association of persons or an unincorporated company with the following major main features.This company is formed by two or more persons.It is usually created by agreement, proof of existence and estoppel (Estoppel is a doctrine in common law jurisdictions recognised both at law and in equity in various forms. In general it protects a party who would suffer detriment). The owners are all liable for legal actions and debts the company may face personally.