FINANCIAL GLOSSARY








Below is a glossary of financial terms written by us.
Simply click on a term to access its definition.
[For a correct use of this glossary, please consult these "notes"]

puce P/E Ratio (Price/Earnings Ratio)

Price/earnings ratio.

puce Pac Man Defense

A stratagem used to prevent a hostile takeover by which the target company tries to acquire the bidder through a counteroffer.

puce Paid-in Capital

Paid in capital.
The amount out of the committed capital which an investor has actually transferred to the fund manager.
Also known as the cumulative takedown amount.

puce Par (Par Value, Face Value)

The nominal dollar amount assigned to a security by the issuer.
For an equity security, in the USA par is usually a very small amount that no longer bears any relationship to its market price, except for preferred stock, in which case par is used to calculate dividend payments.
For a debt security, par or face value is the amount to be repaid to the investor when the bond matures.

puce Par Bond

A bond selling at its face value.

puce Par value

puce Pari Passu

Expression used to describe securities which are to be treated simultaneously as being of equal priority or preference.

puce Participating Preferred Stock

Preferred stock which entitles the holder to its stated dividend and liquidation preference, and also allows the holder to participate in dividends and liquidating distributions declared on common stock.

puce Patent

A legal grant that confers upon the creator of an invention the sole right to make use and sell that invention for a set period of time.

puce Patent Pending

A statement by a Patent Office indicating that a patent has been applied for but not yet granted.

puce Pay to Play

Provision in venture capital documents that states that if one of the investors declines to participate in a later financing round up to its pro rata ownership share of the company, it gives up certain of the beneficial terms of its investment, such as anti-dilution protection, preemptive rights, etc.

puce Pension Funds

Fund set up for a pension plan (qualified retirement plan set up by a corporation, labor union, government, or other organization for its employees).

puce Perfect Competition

Market in which no participant can influence prices. Characterized by a free flow of information, no barriers to entry, and a large number of buyers and sellers.

puce Perpetuity

A stream of constant cash flows that hypothetically will never end.

puce Piggy-back Registration Rights (USA)

Contractual rights granted to security holders giving them the right to have their holdings included in a registration statement if and when the issuer files such a statement.
See also Demand Registration Rights and Registration Rights.

puce Pink Sheets (USA)

A daily listing (printed on pink paper, thus the name) of bid and ask prices for Over-the-counter stocks which are not included in the NASDAQ Bulletin Board published by the National Quotation Bureau.

puce Pit

See Ring.

puce Placement Agent

A person or entity ( broker-dealer ) that acts as agent for the issuer in privately placing securities.

puce Placement Fee

Commission or fee that is due in relation with the placement of new securities or a new fund.

puce Pledging

Offering assets to a lender as collateral for a loan.

puce Poison Pill

The most famous anti-take-over device.It normally takes the form of granting existing stockholders the option (which can only be exercised upon certain events) to buy more stock on very favourable terms as a way of weakening the position of those trying to take control.
See Anti-Take-over Provisions, Blank Cheque Preferred Stock, Shark Repellent and Straggered Board of Directors.

puce Pooling of Interests Accounting (USA)

A method of accounting for a business combination permitted in certain circumstances, where each of the line items on the balance sheets of the two companies are combined.
Generally not permitted in most countries.

puce PORTAL

[Private Offerings, Resale and Trading through Automated Linkages]
A market created by The Nasdaq Stock Market for the trading of certain foreign and domestic securities through an automated quotation and communications system that facilitates private offerings, resales, trading, clearance and settlement of securities offered to Qualified Institutional Buyers under Rule 144A.

puce Portfolio

A collection of investments all owned by the same individual or organisation.

puce Portfolio Company

A market created by the NASDAQ for the trading of certain foreign and domestic securities through an automated quotation and communications system that facilitates private offerings, resales, trading, clearance and settlement of securities offered to Qualified Institutional Buyers under Rule 144A.

puce Post-entry Barriers

Circumstances particular to a given industry that create disadvantages for new competitors attempting to enter the market.
These may include government regulations, economic factors, and marketing conditions.

puce Post-Money Valuation

A company's valuation immediately after its latest round of funding, equal to the new number of shares outstanding multiplied by the share price from the latest financing.

puce Power of Attorney

A legal document that enables one person to legally act on behalf of another person.

puce Pratt’s Guide (USA)

A directory of USA venture capital firms, the types of investments that they typically make and the industries in which they specialise.

puce Pre-emptive Right

The right of an investor to participate in a financing to the extent necessary to ensure that, if exercised, his percentage ownership of the company's securities will remain the same after the financing as it was before.

puce Preemtive Rights

The right of current shareholders to maintain their fractional ownership of a company by buying a proportional number of shares of any future issue of equity.

puce Preferred Return

  • Rate of return which the investor must receive before the fund manager can begin to share in any distributions.


  • The amount that a fund's net asset value must reach before the fund manager can begin to share in any distributions.
puce Preferred Stock

Stock which has a preference over common stock, including priority in receipt of dividends and upon liquidation.
In some cases it also has redemption rights, preferential voting rights, and rights of conversion into common stock.
Venture capitalists generally make investments in the form of convertible preferred stock.

puce Pre-IPO Capital/Fund

Venture capital financing in connection with a company's expansion phase,but not yet ready for an IPO.
A Pre-IPO Fund is a venture capital fund focusing on late round financing.
See also Development Stage Capital/Fund and Mezzanine Capital/Fund.

puce Preliminary Prospectus

The form of prospectus used to solicit indications of interest in an issuer's securities prior to the effectiveness of a registration statement.
In the USA it contains a legend printed in red ink (hence, it is sometimes called red herring) indicating its preliminary nature and that it does not contain final pricing information.

puce Pre-Money Valuation

The valuation made of a company prior to a financing round.

puce Present Value

The value of a future cash stream discounted at the appropriate market interest rate.

puce Price/Earnings Ratio (PE)

PE = Market Price per Share / Earnings per Share.

puce Pricing Call

The discussion between the company and the underwriters of a public offering during which the price of the securities to be sold is determined.

puce Primary Distribution/Shares

A public offering of securities by the issuer itself, as distinct from a distribution by an existing stockholder.
See also Secondary Distribution/Shares.

puce Primary Fund

A fund of funds that invests mainly in new Private Equity funds, in opposition to Secondary Funds.
See also Secondary Funds

puce Primary Investment

An investment in a new Private Equity Fund or directly in a company.

puce Private Company

See Closed Corporation.

puce Private Equity

Equity investment in a company which is not (yet) listed.
Can also take the form of a loan, usually convertible into stock or with options attached to purchase stock.

puce Private Offering Circular

See Private Placement Memorandum

puce Private Placement

The offer and sale of securities not involving a public offering.
The definition of private offering varies from country to country and implies that the stock will be placed only with a limited number of investors.

puce Private Placement Memorandum

[or Private Offering Circular or Offering Circular]
A document used to describe securities not being distributed via a public offering.
It contains much of the same informations that would be included in a prospectus.

puce Privileged Shareholders

Shareholders with special rights.

puce Profit

The remainder after the total cost of doing business is calculated and subtracted from total revenue; value that is clear of all costs; i.e., clear profit.
An economic profit is the return a business makes on invested capital, minus the cost of capital, times the amount of invested capital.

puce Profitability

puce Prospectus

A document which must be delivered to recipients of offers to sell securities and to purchasers of securities in a public offering and which contains a detailed description of the issuer's business.

puce Prospectus Directive

A Directive of the European Union requiring the implementation into the national law of all member states of a set of common standards for securities prospectuses.
A key feature is that of mutual recognition, i. e. that a prospectus that has been approved by the appropriate competent authority of one member state is recognised by the competent authorities of all member states.

puce Proxy Fight/Battle

A group of shareholders seeking to obtain the biggest number of shareholders voting rights on important matters.

puce Public Float

See Float.

puce Public Offering

A public offering of securities.
The definition of a public offering varies from country to country, but in general implies that the offering is being made to a large number of private and institutional investors; that road shows promoting the offering will be open to more than a very restricted audience.
The registration of prospectus material with a national competent authority is generally compulsory.
See Private Placement for comparison.

puce Punitive Financing Round

A round of financing in which some of the existing investors are unwilling to invest in the company.
As a result, the continuing investors and any new investors agree to invest only at a low price, which results in a substantial dilution to the non-participating investors.

puce Purchase Accounting

The normal method of accounting for a business combination, in which the acquiring company treats the acquired company as an investment, adding the acquired company's assets to its own balance sheet.
Any premium paid above market price is recorded as goodwill.

puce Purchaser Representative (USA)

A person who acts on behalf of an investor who otherwise would not be deemed to be an accredited investor under Regulation D of the Securities Act of 1933.
The Purchaser Representative must be appointed in writing and be knowledgeable in financial and business matters and capable of evaluating the merits and risks of the prospective investment.

puce Put Option / Put

The right of an investor to ask for repurchase by the issuer or by another investor of a certain number of securities at a fixed price within a specified time period or at a specified point in time.
See Call Option for converse.





 

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