Expansion, replacement capital and buyout stages of investment.
Compare early-stage.
Glossário
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Later stage
Expansion, replacement capital and buyout stages of investment.
Compare early-stage.
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LBO (leveraged buyout)
A buyout in which the NewCo’s capital structure incorporates a particularly high level of debt, much of which is normally secured against the company’s assets.
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Lead Bank/Bookrunner/Loan underwriter
The lead bank in a loan syndication that underwrites the deal, structures and syndicates the loan to other banks or investors in the market.
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Lead investor
Investor who has contributed the majority share in a private equity joint venture or syndicated deal. See syndicated deal, syndication.
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Lead investor
Investor who has contributed the majority share in a private equity/venture capital joint venture or syndicated deal and that has originated and structured the deal, taking over the main responsibility vis-à vis the syndicate.
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Lead underwriter (or lead manager)
The underwriter that assumes leadership and financial responsibility for placing the securities offered in a public offering. On the cover of a prospectus, the lead underwriter/manager is normally listed on the bottom of the page on the left-hand side, with the other underwriters listed to the right.
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Leavers and Joiners
The arrangements covering: what happens to the profit interest (through carried interest or ownership of shares) of executives who leave an investee company or a venture capital fund; the provision for making a profit-sharing interest available to rising stars (new or young executives who previously did not have such a profit-sharing interest) or new joiners.
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Lehman Formula
A compensation formula initiated by Lehman Brothers for investment banking activities, originally structured as follows: 5% of the first $ million involved in the transaction; 4% of the second $ million ; 3% of the third $ million ; 2% of the fourth $ million ; and 1% of everything thereafter (ie above $4 million).
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Letter of Intent
A letter from the venture capitalist to the investee company indicating a general willingness or intention to engage in some type of transaction. It often precedes negotiation of a complete agreement, and is typically structured so that it is not legally binding on either party.
See Term Sheet.
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Leverage loan market
The market in which leverage loans are syndicated by a lead bank and hence sold on to other borrowers.
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Leveraged recapitalisation
Transaction in which a company borrows a large sum of money and distributes it to its shareholders.
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LIBOR
See London Inter-bank Offer Rate.
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Life sciences
All sciences that have to do with living organisms. Main sectors of activity are Biotechnology, Pharmaceuticals and sometimes Nanotechnology.
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Limited partner
An investor in a limited partnership (ie private equity fund).
Compare general partner.
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Limited partnership
The legal structure used by most venture and private equity funds. The partnership is usually a fixed-life investment vehicle, and consists of a general partner (the management firm, which has unlimited liability) and limited partners (the investors, who have limited liability and are not involved with the day-to-day operations). The general partner receives a management fee and a percentage of the profits. The limited partners receive income, capital gains, and tax benefits. The general partner (management firm) manages the partnership using policy laid down in a Partnership Agreement. The agreement also covers, terms, fees, structures and other items agreed between the limited partners and the general partner.
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Liquidation
The sale of the assets of a portfolio company to one or more acquirors where venture capital investors receive some of the proceeds of the sale.
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Listed company
A company whose shares are traded on a stock exchange
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Listed security
A security that has been accepted for trading on an exchange. To become a listed security, the issuer must satisfy the listing requirements of the exchange. Shares that are not listed may be sold over-the-counter (OTC).
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Listing
The quotation of shares on a recognised stock exchange.
See Float
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Listing requirements
The standards to be satisfied for a security to be admitted to trading on an exchange. Listing requirements vary among exchanges but commonly include financial standards and levels of market capitalisation.
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Lock-up agreement
Agreement between an underwriter and certain stockholders of a company requiring the stockholders to refrain from selling their shares in the public market for a specified lock-up period after a public offering. In the case of a venture capital deal, this prevents the investee company’s executives and the venture capitalist from selling their shares immediately after an IPO. The reasoning behind this restriction is that such a sale would send worrying signals to the market and thus force down the price of shares. Remaining stockholders would then have shares worth far less than their value at IPO.
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Lock-up period
The period of time for which a lock-up agreement is in operation. Underwriters of IPOs generally insist upon a lock-up period for large shareholders of at least 180 days to avoid a disorderly market. The management, company directors and the venture capitalist are the type of shareholders that are usually subject to a lock-up.
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London Inter-bank Offer Rate (LIBOR)
The interest rate that the largest international banks charge each other in the London inter-bank market for loans. This is used as a basis for gauging the price of loans outside the inter-bank market.
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LPS
See limited partner, limited partnership.