Private Equity Glossary of Terms Part 2
Our aim is to make private equity accessible to everyone because a fundamental part of what differentiates Berkeley Assets from most firms in the industry is that we welcome a broad spectrum of investors to place capital with us. We are firm believers in educating investors and removing any level of secrecy or uncertainty that private equity has cultivated over the years. We are and always will be transparent.
With that goal in mind, we are breaking down some of the common technical terms and translating them into plain English.
We hope this means that every potential client will feel more confident and assured discussing opportunities for placing capital with us.
This is the second in a series of plain English scenarios produced by the Berkeley Assets team, don’t forget to visit our blog for more updates.
Private equity - This refers to the holding of stock in unlisted companies – companies that are not quoted on a stock exchange.
Acquisition – The process of taking over a dominant interest in another company. Acquisition describes any deal where the buyer ends up with 50% or more of the target company.
Holding period – This is the period of time that an investment is held. For example, if a private equity firm invests in Company C in February 2016 and then sells its stake in February 2018, the holding period is two years.
Exit – An exit is the means by which a private equity firm or even a fund is able to realise its investment in a company – by an initial public offering, a trade sale (sale to another company), selling to another private equity firm or a sale back to the company.
Initial public offering (IPO) – An IPO is the official term for ‘going public’. It occurs when a privately held company – owned by private equity investors – lists a proportion of its shares on a stock exchange to raise money. IPOs are one of many possible exit routes for private equity firms
Contact us if ever you want to talk in plain English about what investment options we can offer.
Justin is a practicing chartered accountant in the UK and the UAE and a member of the Institute of Chartered Accountants in England and Wales(ICAEW). Based in the Dubai Office, he assists in developing Berkeley’s operational corporate strategy, with a focus on retail clients.