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June 18, 2009 No Comments Author: Andy Jones

Investment Banking – Fees

In selecting a Merger & Acquisition advisor, also referred to as an investment banker, the Seller will sign a negotiable engagement letter outlining the fee structure, the service to be provided, and other general terms of agreement.

The M&A Advisor’s fee structure includes a success fee and often a retainer fee and an expense reimbursement fee as well. The inclusion or exclusion of these three components will vary, depending on the investment bank, the deal size and the particular client.

June 09, 2009 No Comments Author: Andy Jones

Private Equity vs Hedge Funds

While there are no strict definitions of a private equity firm and a hedge fund, some distinct differences separate the two types of firms.

Private equity firms and hedge funds are similar in that both invest from a leveraged pool of capital normally contributed by limited partners; both compensate the management team based on a percentage of profits (typically 20%) as well as charge a fee on assets under management (typically 2%); and both are lightly regulated (as of this writing).

June 03, 2009 No Comments Author: Andy Jones

New Data Module – Senior Lenders

Private Equity Info.com announces the launch of its new data module of U.S. senior lenders.

Subscribers can now search and filter 4,700 senior lender by location, loan types & purposes and number of office locations.

Senior lenders are typically commercial banks or other institutional lending firms that provide senior debt to corporations for a variety of purposes. Key to performing powerful searches, our search engines allow users to sort lenders by the most prevalent lending purposes including:

  • Accounts Receivable Financing
  • Commercial Real Estate Loans
  • Growth Financing
  • Equipment Financing
  • M&A Financing
  • Project Financing
  • Small Business Administration (SBA) Financing
  • Working Capital Financing

In addition to the senior lender firms, Private Equity Info provides an excellent, comprehensive database of merger & acquisition transaction-related firms such as private equity firms, hedge funds, mezzanine investors, small business investment companies, valuation service providers, investment banks and institutional real estate investors.

June 03, 2009 No Comments Author: Andy Jones

Senior Debt vs. Subordinated Debt

Senior debt refers to debt that is in first-lien position. In the event of a default and subsequent liquidation, the senior lender (often a commercial bank), has first priority in recouping its investment. When a company goes bankrupt, stake holders divide the proceeds from selling the company’s assets. The senior lender is first to be re-paid, followed by the subordinated debt holders, followed by equity holders. Because senior debt’s first priority repayment presents a lower-risk position compared to subordinated debt or equity investors, the senior debt is expected to have more favorable interest rates associated with it, commensurate with the lower risk assumed.

June 01, 2009 No Comments Author: Andy Jones

Capital Structure – Equity & Debt

A company’s capital structure is the relative proportion of equity and debt used to finance assets and operations. A company’s capital structure determines both the nature of its stakeholders and its expected cost of capital.

May 26, 2009 No Comments Author: Andy Jones

Private Equity – Carried Interest

Carried interest is the profit earned on private equity investments by a deal-maker in a private equity house. Often known as “carry”, it allows private equity professionals to receive up to 20% of the profit from a company they sell. The “carry” can be a significant portion of a private equity professional’s total compensation.

April 07, 2009 No Comments Author: Andy Jones

Investment Banks – Classification

Merger and acquisition (M&A) advisors provide strategic advisory services for corporate mergers, acquisitions and other types of financial transactions as well as assist public and private corporations in raising equity and debt in the capital markets. These corporate finance advisory firms facilitate mergers and acquisitions, private placements and corporate restructuring.

Corporate finance advisory firms are broadly categorized within the industry as:

  • Bulge Bracket
  • Middle Market
  • Business Broker
February 17, 2009 No Comments Author: Andy Jones

Real Estate Investors – Financial Securities

A real estate investment firm is categorized as having an investment interest in “financial securities” if the firm makes equity and/or debt investments in financial securities backed by real estate assets. Common examples of this would be collateralized debt obligations and mortgage-backed securities.

www.PrivateEquityInfo.com tracks institutional real estate investors, primarily in the United States, by location and specific investment focus.