Entities

Accredited Investor: An accredited investor is an investor who is financially sophisticated and has a reduced need for the protection provided by certain government filings. Most startups or private companies prefer to raise money or from accredited investors because of the vastly reduced paperwork required to be filed with the SEC, and the far fewer disclosures required to be made in writing to the Investor.

Corporate VC: Corporate VC is money provided by investors to startups with perceived growth potential. This is an important source of funding for startups that do not have access to capital markets.

Financial Buyers: Financial buyers include private equity firms (otherwise known as financial sponsors), venture capital firms, hedge funds, family investment offices and ultra high net worth individuals. These buyers are investors and look to identify private companies with attractive future growth opportunities, durable competitive advantages to invest and realize a return on their investment upon exit via a direct sale or an IPO.

Holding Company: A holding company is a parent corporation that owns enough voting stock in another corporation to control its board of directors (and, therefore, controls its policies and management).

Institutional Investor: An institutional investor is an organization that trades securities in large quantities or dollar amounts that sometimes come with the benefit of scale. Institutional investors face fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.

Investment Advisor: An investment advisor makes investment recommendations or analysis for a fee. An investment advisor who has enough assets to be registered with the SEC is known as a Registered Investment Advisor, or RIA.

NewCo: The term “NewCo” is usually put into Merger and Acquisition Documents as a generic name for a new company that the M&A transaction will create. Example: “After the merger, XY Capital Partners will then invest $50 million into NewCo.“

OldCo: “OldCo” refers to the acquired company in a Merger and Acquisition documents. For example: “As contemplated in this acquisition, Oracle will form Soft Holdings. After the transaction OldCo will cease to exist as a separate entity.”

Private Company: A private company is a company or corporation whose ownership is private. A private company does not have to meet the Securities and Exchange Commission filing requirements of public companies. Private companies issue stock and have shareholders but their shares do not trade on public exchanges and are not issued to the general public. A private company is treated as a single legal entity with rights and liabilities separate from its owners. Owners and other private investors are shareholders in the private company.

SPAC: A special purpose acquisition company (SPAC) is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. otherwise known as “blank check companies,”

Stockholders: A stockholders is any person, company or legal entity that owns a share of another company.

Strategic Buyers: Strategic buyers search for operating companies that offer products or services like their own. Targets are often competitors, suppliers, or customers. Strategic buyers may also acquire firms that have operations that are unrelated to their core businesses, often to diversify their revenue sources. Their goal is to identify targets whose products or services can create long-term shareholder value.

Surviving Corporation: A surviving corporation is the company in the merger or acquisition transaction that acquires the targets assets and continues the operations of the preceding company. The surviving company may be a newly organized legal entity or an existing one.

Venture Capital: Venture capital is capital provided bby investors to small business and start-up firms that have potential high growth opportunities.