IPO (Initial Public Offering)

A market approach valuation technique that estimates the value of a subject company by reference to the trading multiples of publicly listed companies with similar business characteristics. The method involves identifying comparable public companies, selecting appropriate valuation multiples (such as EV/EBITDA or P/E), making adjustments for differences in size, growth, risk, and marketability, and applying the adjusted multiples to the subject company's financial metrics.

The duration for which an investor retains an investment before exit, typically measured from the date of initial acquisition to the date of sale or IPO. In private equity and venture capital, holding periods typically range from three to seven years and influence the internal rate of return calculation.

Investment capital provided to companies that are not listed on a public stock exchange, or used to take public companies private. PE firms typically acquire controlling stakes in mature businesses, apply operational improvements, and seek exits within 3-7 years.

The year in which a private equity or venture capital fund makes its first investment or its final close. Vintage year is used to group and compare fund performance because macroeconomic conditions at the time of investment significantly influence returns.

A term in a venture capital or private equity investment that determines the order and amount in which investors are paid before other shareholders in a liquidation event (sale, wind-down, or IPO). Common structures include 1x non-participating and 1x participating preferences.

A transaction in which a company's existing management team acquires the business, often with financial backing from private equity or debt providers. MBOs are a common succession and exit route, particularly for founder-led or family-owned businesses.

A reduction applied to the value of an ownership interest to reflect the lack of a ready market in which to sell the interest quickly and at full value. Also known as a discount for lack of marketability (DLOM), this adjustment is particularly significant for private company valuations where shares cannot be readily traded on a public exchange.

A business in which a private equity, venture capital, or growth equity fund has invested. Portfolio companies receive not only capital but also strategic support, operational guidance, and governance oversight from the fund, with the aim of accelerating value creation and achieving a profitable exit.