Master ACRONYM LIST Flashcards by Spencer Gunning

What are the various private investment channels?

FLICD

Fund of fund
Listed PE Vehicles
Indirect Investments
Co-investment
Direct Investments

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What are the characteristics in investment into infrastructure?

MUCS

Mgmt involvement (not part of ownership)
Upfront Capital high
Contracts heavily used, regulated pricing
Stable Cashflows, so lower returns

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What are the key characteristics of Direct Investments into Private Companies?

CLIMBFR

Control and influence
Liquidity
Info prior to investment (due diligence)
Monitoring (reporting)
Board representation
Financial structure
Rewards to asset managers

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What are the key Characteristics of an Infrastructure Investment?

DSLR

Diversified Benefits
Stable Cashflows and Economic Security
Long-Term Duration & Attractive long term returns
Regulator Rates or Inflation Protection

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What are the Processes that are used to execute on active Asset Management Strategies?

PBRMAD

Performance Incentives
Business Plan Development
Recruiting Senior Management
Monitor Financial Performance
Active participation in Management
Development of Value Creation Strategies

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What are the typical risks when Investing in Infrastructure?

UPSLCC

Uniqueness of Sub-Sector - Low correlation accross
Political & Regulatory Risks - diverse areas
Stage of Development - Cost/return risk
Liquidity - due to size and limited buyers
Credit market Risk - refinancing issues / assumptions
Currency volatility - Global investment expose Risk

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What are the Key benefits of PPP Infrastructure Investments to Governments?

BESTIICE

Budgetary Certainty over time
Expose State Owned Assets to Private Sector
Stimulate Economy with Joint Ventures
Transfer Skills from Private to Public Sector
Incentivize Private Sector Timely Project Delivery
Improve Efficiency
Create Diversified Economy
Extract Long-Term value for money transfer from public to private

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What are some of the Main Characteristics of Private Equity Investments?

ASSHOSS

Ability to Leverage Balance Sheet
Strong Cash Flows w/ potential for margin increase
Shorter Investment Horizon (5-7 years)
Higher Return Expectations
Organic Growth or through Acquisitions
Strong Management Team
Strong or Leading Market Position

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What 3 Pieces of Information are received after the Buyer & Seller enter exclusivity?

ABS

Actual Results
Board Approved Projections
Senior Management

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What are some of the practical issues that exist with Bridge Valuations?

DOCTR

Different Valuation Methods Used
Output Fails to explain value drivers
Complex
Time Consuming
Reclassification of cash flow line items create noise

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What Core Differences are seen when evaluating market transactions against a targeted company?

CPPQB

Company Size Differs
Profitability, Historical growth/forecasted growth
Product and Geographic Diversification
Quality and Sophistication of Management Teams
Buyer Synergies that may have impacted Market Transaction Valuations

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Financial Investors looking @ growth companies will seek financing sources that achieve what objectives?

MOPE

Minimize Equity Injections
Optimize Cash Conversion from EBITDA
Provide Payment flexibility that matches inv. holding periods
Expansion and Facilitation of future growth

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What are the Main drawbacks of issuing corporate bonds?

OIIL

Obligations to file public fin statements to public co protocols
Inability to renegotiate financing terms without replacing facility
Increased overhead costs including annual bond rating costs and higher stakeholder relations costs
Lack of flexibility with respect to covenant breaches

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What are the decisions that can be made to transform the business?

OREAR

Optimize tax structure
Restructure to cut staff
Expand into new products
Accretive M&A
Refinance to lower WACC

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What are the ways to create value at investee level?

BAMVILLL

Business restructuring
Accretive asset acquisitions
Multiple expansion 
Value accretive investments
Increase post-tax profit
Lower WC requirements
Lower WACC
Lower capex

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What are a few typical EOI Tactics / Strategies?

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CARPI

Communicate Comfort & Knowledge
Acknowledge Vendor Concerns but remain vague
Range of Values Provided
Provide Detailed Breakdown of due diligence timeline
Identify Management Team objectives and express capability to meet

What are some Key Considerations during the LOI Stage?

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FMVCE

Communicate Timeline
Valuation Figures are refined and quoted
Funds access is expressed 
Exclusivity with purchase price / work. cap adjustments
Managerial kickers are available

What are the Five Requirements that are finalized with exclusivity?

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TLCFN

Tax Structuring
Lender Financing
Completing Final Price negotiations
Finalizing Proposed Management incentive plans
Negotiating purchase agreement and shareholder Ag.

What are the Key advantages of being a Public Company?

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HIIAE

Higher Visibility
Improved Valuation
Increased Employee Motivation & Retention
Access to capital 
Enhanced liquidity

What are the Factors for considerations that companies contemplate when Going Private?

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RIISD

Risks of Litigation
Increased Regulations
Illiquidity in Public Markets
Scrutiny of Public Companies for doing so
Disadvantages of Private movement (long, costly)

What are the specified types of transactions addressed by the 61-101 Provision?

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BRII

Business Combinations
Related Party Transactions
Insider Bids
Issuer Bids

what are the main ways to increase top line revenue growth with investee companies?

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GRIN

geographic expansion 
revitalize underperforming subsidiary
implement a new market strategy to 
     increase volume
new market segments

what are the ways in which a company can extract value from M&A / Divestment

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RADCO

revenue synergies for cross-selling
acquire a competitor
divest non-core assets
cost synergies by allowing consolidation of manufacturing
opportunity to acquire new business lines

what are the main questions to ask in evaluating pricing of M&A transactions?

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MTSS

multiples arbitrage?
transformative/tuck in?
synergies included in purchase price?
synergies - how will they be realized?

what are the three key results of a dividend recap?

CAT cap structure may result in higher valuations additional leverage will leverage future returns to shareholders tax benefit of new cap structure

what are the main reasons for a PE manager to refinance capital structure

DRAMP dividend recap reduce financial covenants achieve lower Cost of capital than existing match duration of debt to expected hold poor performance may lead to new amended structure with better cov package

what are the key advantages of trade sales?

SEC special purchaser synergies expedited process control of process

what are the disadvantages of trade sales

DMRS discount embedded in consideration mgmt resistance, as they may b replaced regulatory approval on cross border safeguard of info

what are the main disadvantages of IPOs

TVRPV time and cost valuation vis a vis trade sales may not account for potential special purchaser synergies if they sold via trade sale reporting requirements public markets focus on short term results volatility of public markets

What are the main downfalls of private equity investments?

MIILE ``` miscalculation of synergies insufficient due diligence improper deal structure lack of strategy entry price is too high ```

What are the Main Aspects of building an internal Valuation Process?

VACAIE ``` Valuation Committees Audit Reviews Consistency Appropriate Valuation Frequency Independence External Independent Valuations / Valuation Reviews ```

What are some Examples of Subject Experts in Valuation?

TAROT ``` Technology Consultants Actuarial Consultants Real Estate Oil & Gas Engineers / Consultants Timber/Renewables Resource Appraisers ```

What are the common areas of PPA?

DCPCC ``` debt balances cash accounts in regards to FX pension deficits / enviro liabilities cash balances capital lease classifications ```

what are the key items to remember in identifying normalized NWC levels in a PPA?

BBTC ``` buyers want higher buyers/sellers may decide on post-closing adjustment TTM average WC is a good starting point closing date working capital balances take time to complete ```

what are the key conditions on holdbacks?

NLNETP nature of triggering event may factor into the period of the holdback litigation may be subject to WC adj, as well as enviro, tax liabs, etc negotiation point always, with usually 0-20% of vendor proceeds for a period escrow agent usually used to hold triggering event lapses, holdback is released proceeds are used to pay for the triggering liability

what are the considerations to keep in mind when using a VTB or contingent consideration in a transaction?

VBELT VTBs transfer risk with contingent performance buyers are incentivized to negotiate longer maturities earn outs transfer risk to vendor more legal documents reflect the motivations of the term earn out terms of VTB can cause issues (rate, pmt, term)

what are the major areas that buyers look for affirmation in representation from a vendor?

FAPQ ``` financial statements assets are sufficient to meet ongoing needs projected results are done confidently quality of assets is as stated (ie. A/R is good, assets are depreciated accordingly) ```

what are the major areas that a buyer will seek qualification statements in lieu of absolute representation?

MMK ``` materiality threshold (ie. stating a % of confidence or variance) MAC clause --> material adverse change knowledge is all disclosed ```

What are the main disadvantages of being a public company?

DRISLE ``` Disclosure requirements Risk of thin trading / downward stock price Increased costs Short termism Loss of Control Exposure to civil liability ```

Master ACRONYM LIST Flashcards

(39 cards)