A web site at which bidders in an auction process can review information about the company that is for sale.
Glossário
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Data room
A web site at which bidders in an auction process can review information about the company that is for sale.
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DAX
A price-weighted index of the most heavily traded stocks on the Frankfurt Stock Exchange.
See index.
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Deal flow
The number of investment opportunities available to a private equity house.
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Debenture
An instrument securing the indebtedness of a company over its assets.
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Debt financing
Financing by selling bonds, notes or other debt instruments.
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Debt ratio
Debt capital divided by total capital.
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Debt service
Cash required in a given period to pay interest and matured principal on outstanding debt.
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Debt/equity ratio
A measure of a company’s leverage, calculated by dividing long-term debt by ordinary shareholders’ equity.
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Defined Benefit Plans
A pension plan that promises a specified monthly benefit to be paid to the employee at retirement.
See Defined Contribution Plans.
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Defined Contribution Plans
A pension plan that does not promise a specificamount of benefits at retirement. Both employee and employer contribute to apension plan, the employee then has the right to the balance of the account.This balance may fluctuate over the lifetime of the pension plan.
See DefinedBenefit Plans.
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Delisting
The removal of a company from listing on an exchange.See public to private, venture purchase of quoted shares.
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Derivative or derivative security
A financial instrument or security whose characteristics and value depend upon the characteristics and value of an underlying instrument or asset (typically a commodity, bond, equity or currency). Examples include futures, options and mortgage-backed securities.
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Development capital
See expansion capital.
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Development Fund
Venture capital funds focused on investing in later stage companies in need of expansion capital.
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Dilution
Dilution occurs when an investor’s percentage in a company is reduced by the issue of new securities. It may also refer to the effect on earnings per share and book value per share if convertible securities are converted or stock options are exercised.
See anti-dilution provisions.
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Direct public offering
A public offering in which shares are sold directly to investors, rather than through an underwriter.
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Disbursement
(US) The flow of investment funds from private equity funds into portfolio companies.
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Disclosure
Disclosure in general refers to the communication of information between two different parties. In the private equity and venture capital world, there are two different sides of disclosure. There is on the one hand the disclosure between the general partners and the limited partners, which is governed by the limited partners agreement. On the other hand, there is the disclosure of information by the limited partners on the general partners activities to the public at large.
See FOI
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Disclosure letter
A document disclosing matters which might otherwise amount to a breach of warranties. Matters so disclosed limit the effectiveness of the warranties.
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Discounted cash flow (DCF)
A method of assessing the value of an investment based on predicted cash flows discounted to take account of the fact that a euro tomorrow is worth less than a euro today.
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Discretionary client
A client who gives an investment manager total authority to manage his assets.
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Distribution
The amount disbursed to the limited partners in a private equity fund.
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Distributions to paid-in capital (D/PI)
A measure of the cumulative distributions returned to the limited partners as a proportion of the cumulative paid-in capital. DPI is net of fees and carried interest.
See realisation ratio, residual value, RV/PI and TV/PI.
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Divestment
See exit
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Dividend cover
A ratio that measures the number of times a dividend could have been paid out of the year’s earnings. The higher the dividend cover, the safer the dividend.
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Dow Jones Industrial Average (DJIA)
An index based on 30 major stocks listed on the New York Stock Exchange. The companies included in the DJIA are all major factors in their respective industries, and their stocks are widely held by individuals and institutional investors. The DJIA is one of the oldest and most widely recognised stock indexes, and has been published daily for more than 100 years.
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Down Round
Equity financing in a company which values the company at a lower amount/price than in previous financing rounds.
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DPI - Distribution to Paid-In
The DPI measures the cumulative distributions returned to investors (Limited Partners) as a proportion of the cumulative paid-in capital. DPI is net of fees and carried interest. This is also often called the “cash-on-cash return”. This is a relative measure of the fund’s “realized” return on investment.
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Drag-along rights
If the venture capitalist sells his shareholding, he can require other shareholders to sell their shares to the same purchaser.
Compare tag-along rights.
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Drawdown
When investors commit themselves to back a private equity fund, all the funding may not be needed at once. Some is used as drawn down later. The amount that is drawn down is defined as contributed capital.
See commitment, contributed capital.
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Dual listing
The listing of a security on more than one exchange. Increasingly, securities are being listed on both a local exchange and an exchange with more widespread coverage. In addition, issuers may list on both a US exchange and a European or an Asian exchange.
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Due diligence
For private equity professionals, due diligence can apply either narrowly to the process of verifying the data presented in a business plan/sales memorandum, or broadly to complete the investigation and analytical process that precedes a commitment to invest. The purpose is to determine the attractiveness, risks and issues regarding a transaction with a potential investee company. Due diligence should enable fund managers to realise an effective decision process and optimise the deal terms.