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Glossary of Business Terms

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LBO - leveraged buy-out
Leveraged Buy-out or LBO is an acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business. In LBO, the acquiring company uses its own assets as collateral for the loan in hopes that the future cash flows will cover the loan payments.
lead investor
Lead investor is a company's principal provider of capital, such as the entity which originates and structures a syndicated deal.
limited partnership
Limited partnership is a business organization with one or more general partners, who manage the business and assume legal debts and obligations and one or more limited partners, who are liable only to the extent of their investments. Limited partnership is the legal structure used by most venture and private equity funds. Limited partners also enjoy rights to the partnership's cash flow, but are not liable for company obligations.
Liquidation is the sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.
liquidation preference
Liquidity preference is the right to receive a specific value for the stock if the business is liquidated.
liquidity event
Liquidity event is the way in which an investor plans to close out an investment. Liquidity event is also known as exit strategy.
lock-up period
Lock-Up Period is the period an investor must wait before selling or trading company shares subsequent to an exit, usually in an initial public offering the lock-up period is determined by the underwriters.
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<February 2019>