Glossary

Abort costs

Third party costs (e.g. legal and accountancy fees) incurred in connection with the evaluation and negotiation of any investment opportunity or the disposal of any investment which does not ultimately lead to the acquisition or disposal of that investment.

Abort fees

A fee which may be agreed to be paid by a target company in the event of an aborted transaction in order to reimburse some or all of the abort costs.

Acquisition

The obtaining of control, possession or ownership of a company.

Advisory board

A board of members representing limited partners’ interests which oversees the activities of the manager. NB. This is distinct from an “investment advisory board” which may feature in some limited partnerships and which is directly involved in the investment decision making process.

Angel

A wealthy individual who invests in entrepreneurial firms. Although angels perform many of the same functions as venture capitalists, they invest their own capital rather than that of institutional and other individual investors.

Application form

The document by which investors apply to become limited partners and agree to be bound by the terms of the Limited Partnership Agreement (LPA).

Asset stripping

Dismantling an acquired business by selling off operational and/or financial assets.

Average IRR

The arithmetic mean of the internal rates of return.

Balanced strategy

A venture fund investment strategy that includes investment in portfolio companies at a variety of stages.

Break-up fees

See abort fees.

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