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This page intentionally left blank 333 Index A Acquisition see Merger and acquisition Adjusted present value (APV), company valuation , 182 – 183 , 197 – 198 Agency theory, overview , 28 , 30 – 32 , 31f AMC see Asset management company APV see Adjusted present value Asset management company (AMC) carried interest , 59 , 60f close-end fund relationship , 56 – 59 , 56f costs and revenues , 57 – 58 management fee , 58 overview , 42 Asset option, company valuation , 183 B Balance sheet, company valuation , 190 – 191 , 190f BALTD, fi nancing history , 235 – 236 Bank European Union legislation , 42 – 43 , 43f Basel II framework , 45 – 46 United States regulation of private equity investment , 71 Basel II, bank and investment fi rm rules , 45 – 46 BIMBO see Buy in management buy out Board of directors, venture capitalist involvement , 146 BOLT, fi nancing history , 249 – 250 Book value (BV), company valuation , 195 Business Angel early stage fi nancing , 209 – 210 fundraising , 122 motivation and criteria , 212 – 219 United Kingdom regulation , 75 United States regulation , 71 – 72 Business plan, analysis in valuation , 133 , 177 – 179 , 177f Buy back, exit strategy , 162 Buy in management buy out (BIMBO) , 238 see also Buy out Buy out characteristics corporate governance , 241 – 242 fi nancial structure , 240 – 241 conditions for good buy out , 244 – 251 managed risk , 211 – 212 overview , 237 – 240 prospects , 293 types , 267 – 268 valuation , 210 – 211 BV see Book value C Calling plan, fundraising , 127 – 128 Capital Asset Pricing Model (CAPM), company valuation , 193 – 194 Capital gains tax see Taxation Capital-structure irrelevance theory, overview , 28 , 29 CAPM see Capital Asset Pricing Model Carried interest asset management company , 59 , 60f close-end fund , 59 regulation in United States and United Kingdom , 77 [...]... European Private Equity and Venture Capital Association (EVCA) fiscal system comparative analysis by country, 93f private equity finance vehicles by country, 62f 2007 annual survey divestment activity, 14 fundraising activity, 13–14 investment activity, 12–13 EV see Enterprise value EVCA see European Private Equity and Venture Capital Association Examples see Case examples Exiting buy back, 162 initial... price setting, 183–184 venture capitalists, 209–210 STUFFED, financing history, 264–265 T Tag along right, definition, 155 Taxation comparative analysis by country France, 88–89 Germany, 89 Italy, 88 Luxemborg, 90–91 Netherlands, 91 Spain, 90 total tax rate, 94 United Kingdom, 91–92 United States, 92 fundamental role in private equity and venture capital, 81–84, 82f, 83f private equity player interactions,... valuation; Exiting; Selection, investments Value–added tax see Taxation Value chain, private equity firms, 290–292, 291f VCT see Venture capital trust VEGOIL, financing history, 247 Venture capital cycle, 33–35, 82f definition, 3–5 investment types, 110 taxation impact see Taxation Venture capital fund features, 106–107, 107 United Kingdom regulation, 73 United States regulation, 68–70, 70f Venture capital method,... back, 162 initial public offering, 164–165 sale to other private equity investors, 162–163 strategy for equity investment, 112–113 timing, 169–171 trade sale, 161–162 valuation of private equity companies exiting considerations, 184–185 potential advantages and disadvantages, 165–169 segmentation of private equity operators, 169–171 write-off, 163–164 Exit phase, private equity cycle, 38–39 Exit ratchet,... FC, financing history, 234–235 Financial statement, company valuation, 192, 193f FINSERV, financing history, 217–218 Five forces model, 134f, 135f FLUFF, financing history, 218–219 FMM, financing history, 231 Focus–ownership–positioning (FOP) approach focus of investment, 284–285 overview, 283–292 ownership of private equity firms, 285–287 positioning of market, 287–289 value chain of private equity firms,... overview, 89 vehicle taxation, 100–102 Global cap, calculation, 44f Golden age, private equity, 279–281 H HAIR & SUN, financing history, 248–249 Hedge fund, overview, 49 I IBO see Investor buy out INBIOT, financing history, 215 Incubator seed and start-up investments, 288 Industrial and Financial Corporation Act, 72 Initial public offering (IPO) advantages company, 269–270 management, 270–271 shareholder, 270... venture capitalists, 209–210 Selection, investments business plan analysis, 133 due diligence, 136 five forces model, 134f, 135f investment process summary, 137f Skill, requirements in investment process, 113–115, 114f Small Business Investment Act, 67 Small business investment company (SBIC), United States regulation, 70–71 Small cap transactions, prospects, 294 Sovereign funds, 281 Spain private equity. .. Turnaround financing executives, 254 overview, 253–254, 254 reasons, 255–256 risk valuation and management, 256–257 U UK see United Kingdom United Kingdom (UK) carried interest regulation, 77 European Union regulation differences, 66 legislation of equity investors Business Angels, 75 dedicated public institutions, 75 merchant banks, 75 overview, 72–75 venture capital funds, 73 venture capital trusts,... SPINORG, financing history, 218 Staging technique provision, definition, 154 Stain and Steel, financing history, 232–233, 245–246 Start-up stage see also Seed financing financial needs of firms, 8–9, 9f financing innovation development support, 211–212 investor motivation and criteria, 212–219 operating phases, 208–209 overview, 18–19, 20f, 205–208, 207–208 prospects, 294 target company selection, 210–211 investor... business investment company Seed financing innovation development support, 211–212 investor motivation and criteria, 212–219 investor risks, 206–207 operating phases, 208–209 overview, 18, 19f, 205–208 prospects, 294 target company selection, 210–211 valuation considerations enterprise value analysis, 181–183 340 Index Seed financing (Continued) financial needs assessment, 179–181 price setting, 183–184 venture . Guide to private equity & venture capital in the UK & Europe . London : Pitman Publishing . Venture Economics. (1988). Exiting venture capital investments . Wellesley, MA. Venture. . Small business lending and the changing structure of the banking industry . Journal of Banking and Finance , 22 . Titman , S. , & Wessel , R. ( 1988 ) . The determinants of capital structure. analysing industries and competitors . New York : The Free Press . Poterba , J. ( 1989 ) . Venture capital and capital gain taxation . In L. Summers (Ed.) , Tax policy and the economy . MIT Press