On a lighter note...

  • Private Equity A-Z

    A is for…

    Asset strippers and / or Alchemy, a former private equity investor. According to the Governor of the Bank of England Alchemy was doomed to failure.

    B is for…

    Business Plan. Expansive and unrealistic document.

    C is for…

    Carried interest. The percentage of the profit on a transaction that goes to the partners of the PE firm. Known as 'carry' as in 'too much money to carry'.

    D is for…

    DCF analysis. Deceit by Computer Fraud. A highly scientific and extremely unreliable method of valuing companies. Also: Due Diligence. The (sometimes optional) process of finding out what you're buying. Ideally before you buy it. And: Debt - means of postponing pain recently very popular with the UK Government and others. And: DB Pension scheme - something we would all like but no employer can reasonably afford.

    E is for…

    Exit. The only door a VC can see.

    F is for…

    Forensic accounting, fraud and foolishness. Private Equity hot topics from 2006 and 2007.

    G is for…

    Government. Major source of troubled companies.

    H is for…

    Hockey stick. Every self-respecting business plan (see B) should have one. Shows the smooth line progression from heavy start-up loss to Microsoft-levels of profitability that is every start-up's birthright. Hockey sticks are useful for beating management over the head with when they do not happen.

    I is for…

    Internet. The medium by which a number of stupid and unlikely people have made millions. And lost them again. To be approached with caution. Also: Incubator. Where teenagers lecture entrepreneurs on the facts of business life (how much they can sell their Pokemon cards for; the latest Teletubby stories etc.). Would-be investment executives work at incubators until they are old enough to join a proper firm.

    J is for…

    Jersey - where many VC funds are domiciled. Because they like the weather.

    K is for…

    Kindergarten. See Incubator.

    L is for…

    Loadsa money. Also see A, C, G and P. A recurring (aspirational) theme. Also: Lawyers. A necessary evil. Apparently.

    M is for…

    Management. To be blamed for poor investments. Also: Moulton. To be praised for excellent investments.

    N is for…

    NPV - No Positive Value. Another widely used and largely useless valuation technique. Also: non-executive director. The excuse a VC makes for charging extortionate annual fees for a monthly visit. During this visit they will (a) eat your biscuits, (b) drink your coffee (c) use your toilet (d) tell you to 'work harder' and (e) ask for directions to the exit (also see E).

    O is for…

    Overleverage. The natural state of megafund portfolio companies. Recently the nation too.

    P is for…

    Private Equity - VCs like to keep private just how much equity they own. Also: Portfolio Company. Like children - cute to look at in the early stages, then they start spending your cash and ruining your records, before you finally lose patience with them and boot them out of the family home.

    Q is for…

    Question. Outmoded practice discarded because of its ability to prevent deals in 2006 and 2007. Returning to fashion.

    R is for…

    Rest in Peace or Relax in Prosperity. (See A)

    S is for…

    Ski trip. Winter activity for many megafund personnel.

    T is for…

    Trade sale. What a VC tells his investment committee when he can't think how to exit a deal Also: Terrible deals. What the competition does.

    U is for…

    Unions. A VCs greatest ally. Particularly helpful in restructuring dying businesses to meet the needs of the market economy. We are all capitalists now.

    V is for…

    Venture Capital. Continuous revisiting of hope versus experience in investments. Also: Vendor - the most powerful participant in an overfunded private equity market.

    W is for…

    Warranties and indemnities. A guarantee (backed up with financial penalties) from the vendor to say they have been honest guv. Useful in negotiation with vendors. Also: Window of opportunity. What a management team always promises. Not to be confused with defenestration - what happens to a management team when the window of opportunity fails to materialise.

    X is for…

    As in ex-investor. (See A)

    Y is for…

    Youngster. Dot.com manager.

    Z is for…

    Zero sum game. Pleasant way of generating M&A fees.

  • Industry Specific Glossary

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    Industry

    Industry equivalent

    General language

    Undergarment Double Dip Withdrawal of support
      Person who sees cup half full Optimist
      In his cups Drunk
      Strapping Lad Support staff
      Hard Wired Stiff
      Price Elasticity Price sensitivity
    Carpet Pile In Engage enthusiastically
      Roll-up Buy and build strategy
      Roll-out Branch extension
      Carpet-Bomb Mass destruction
      Tuft Times Difficult economics
      Underfelt Stealthy grope
      Beating your way in Forcible entry
      Brush past Clean history
      Brush off Reject
      Beats the hell out of me Profess ignorance
    Dental products Fill-in deal Accretive acquisition
      Bridge Temporary financing
      Drill down Analyse
      Cutting edge Advanced
      Incisive Sharp
      Grinding out overheads Cutting costs
      Gnasher Bite a woman
      Root Cause
      Extrusion Removal
    Mattress Flat out Trying hard
      Rebound Second marriage
      Broken spring Pain in rear
      Product stress tester Mistress
      Bed down Settling in
      Sleeping partner Venture capitalist
    Window Q. How do you describe a lunatic in the window industry?
    A. Unhinged
      Q. What is a compelling argument in the window industry?
    A. An open and shut case
      Q. What is a bad outcome in the window industry?
    A. A smashing success
      Q. What does a good joke do in the window industry?
    A. Cracks you up
      Q. What do you call a forecast in the window industry?
    A. A vision