The situation in a sub-critical mass business with no potential to reach critical mass. So-called because the managing director ends up running around getting nowhere and becoming very frustrated.
Glossário
-
Hamster wheel
The situation in a sub-critical mass business with no potential to reach critical mass. So-called because the managing director ends up running around getting nowhere and becoming very frustrated.
-
Hands-off
A private equity investment in which the venture capitalist contributes only capital – and not business know-how or management involvement – to the investee company.
-
Hands-on
A private equity investment in which the venture capitalist adds value by contributing capital, management advice and involvement.
-
Hard circle
Prospective purchasers of securities in a public offering who are listed in the Book maintained by the lead managing underwriter and who are considered very likely to actually buy shares in the offering.
-
Hedge Fund
An investment vehicle, where managers invest in a variety or markets and securities, to achieve the highest absolute return. Investments could be either made in financial markets, using stocks, bonds, commodities, currencies and derivatives, or by using advanced investment techniques such as shorting, leveraging, swaps and using arbitrage.
-
Hedging
An investment that is made to offset the risk of price movements of one security, by taking an opposite position in a different security, hence balancing the risk of the first investment. Examples are derivatives, such as options and futures, linked to a certain security.
-
High yield bonds
These play a similar role to mezzanine finance in bridging the gap between senior debt and equity. High yield bonds are senior subordinated notes not secured against the assets of the company, and which therefore attract a higher rate of interest than senior debt.
-
Hockey stick
A curve describing the evolution of the earnings of a company poised for rapid growth. This can also be described by the IRR of a private equity fund as it rises from negative to positive.
See J-curve.
-
Holding period
The length of time an investment remains in a portfolio. Can also mean the length of time an investment must be held in order to qualify for Capital Gains Tax benefits.
-
Horizon internal rate of return
An indication of performance trends within an industry sector. Horizon IRR uses the beginning net asset values as an initial cash outflow and net asset values at the period end as the terminal cash flow. Through these values plus/minus any net interim cash flows, it calculates IRRs for the defined time period.
See IRR.
-
Horizon IRR
The Horizon IRR allows for an indication of performance trends in the industry. It uses the fund’s net asset value at the beginning of the period as an initial cash outflow and the Residual Value at the end of the period as the terminal cash flow. The IRR is calculated using those values plus any cash actually received into or paid by the fund from or to investors in the defined time period (i.e. horizon).
-
Hostile offer (or hostile bid)
An offer which is made for a target company but which isnot recommended for acceptance by shareholders by the board of the target company.
-
Hurdle rate
A rate of return that must be achieved before a manager becomes entitled to carried interest payments from a fund; usually set as an IRR (Internal Rate of Return) but related to the risk free rate of return an investor could obtain in the same country as the fund is investing in.