Recapitalisation

A transaction in which existing shareholders sell their equity to new investors rather than the company issuing new shares. Secondary sales provide liquidity to founders and early investors without diluting other shareholders or changing the company's capitalisation.

A hybrid form of capital that combines elements of debt and equity, typically structured as subordinated debt with equity warrants or conversion features. Mezzanine financing is often used in leveraged buyouts, growth capital, and recapitalisations, and sits between senior debt and equity in the capital structure.

A provision that allows majority shareholders (or lead investors) to force minority shareholders to join in the sale of the company on the same terms. Drag-along rights prevent minority holders from blocking an exit that the majority supports.

The weighted average cost of capital, representing the blended rate of return a company must earn on its assets to satisfy both debt holders and equity investors. WACC is used as the discount rate in DCF valuations and as a hurdle rate for investment decisions.

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.

A financial leverage ratio calculated by dividing total debt by total shareholders' equity, indicating the relative proportion of debt and equity financing in a company's capital structure. A higher ratio indicates greater financial leverage and potentially higher financial risk, while a lower ratio suggests more conservative financing.

A financial metric measuring the proportion of debt in a company's capital structure relative to its earnings, equity, or assets. The most common leverage ratios in corporate finance and lending include net debt to EBITDA, debt to equity, and debt to total assets.

The total value of a company's or fund's assets minus its liabilities. For investment funds, NAV represents the per-share or per-unit value.

What is a secondary sale and how does it work?

A secondary sale is when existing shareholders (investors, founders, employees) sell their shares in a company to new investors without the company itself raising new capital.

What is a secondary transaction in venture and who benefits?

A secondary transaction is the sale of existing shares (founder, early investor, employee) to a new investor, providing partial liquidity without a full company exit.

What is a right of first refusal (ROFR) and how does it affect secondary sales?

ROFR gives the company or other shareholders the right to purchase shares before a shareholder can sell them to an external buyer, preserving cap table control.