The contract that specifies the compensation and conditions governing the relationship between investors (LPs) and the venture capitalists (GPs) for the duration of a private equity fund’s life.³

A nontaxable entity in which each partner shares in the profits, losses, and liabilities of the partnership. Each partner is responsible for the taxes on its share of profits and losses.³

Preferred stock that has the right to share on a pro-rata basis with any distributions to the common stock upon liquidation, after already receiving the preferred-liquidation preference.³

A preferred stock in which the holder is entitled to the stated dividend and also to additional dividends on a specified basis upon payment of dividends to the common stockholders.³

At an equal rate or pace, without preference.³

In a rights issue, arrangement by which shareholders are given the right to apply for any shares that are not purchased.³

Occurs when demand for shares exceeds the supply or number of shares offered for sale. As a result, the underwriters or investment bankers must allocate the shares among investors. In private placements, this occurs when a deal is in great demand because of the company’s growth prospects.³

The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.³

Over-the-Counter.

The number of shares set aside for future issuance to employees of a private company.³