Glossary of private markets and pre-IPO terms
- Unicorn
- A privately held company valued at more than 1 billion dollars.
- Decacorn
- A privately held company valued at more than 10 billion dollars.
- Hectocorn
- A privately held company valued at more than 100 billion dollars.
- Pre-IPO
- The phase before a company lists its shares on a stock exchange.
- IPO (initial public offering)
- The first sale of a company's shares to the public on a stock exchange.
- Secondary transaction
- A sale of existing shares by a current holder, such as an employee or early investor, rather than the issuance of new shares by the company.
- Primary round
- A funding round in which the company issues new shares and receives the proceeds.
- Tender offer
- An organized offer, often run by the company, to buy shares from employees and early holders.
- SPV (special purpose vehicle)
- A legal entity created to hold an investment, often the shares of a single company, on behalf of several investors.
- ROFR (right of first refusal)
- A contractual right allowing the company or existing investors to buy shares on the same terms as a proposed sale to a third party.
- Co-sale right
- A right of certain shareholders to sell alongside another shareholder on the same terms.
- Liquidation preference
- A term giving holders of certain share classes priority in receiving proceeds when the company is sold or liquidated.
- A share class with additional rights, such as liquidation preference, compared with common shares.
- The basic share class, typically held by founders and employees.
- Lock-up
- A period after an IPO during which existing holders are restricted from selling their shares.
- Greenshoe (over-allotment option)
- An option that lets underwriters sell additional shares, up to a set percentage, if demand in an IPO is strong.
- Cap table
- A table listing all shareholders of a company, the shares they hold and their share classes.
- Post-money valuation
- The value of a company immediately after a funding round, including the new capital.
- Pre-money valuation
- The value of a company immediately before a funding round, excluding the new capital.
- Qualified or professional investor
- An investor who meets legal criteria, which vary by jurisdiction, to access certain private and restricted offerings.
- Accredited investor
- The United States term for an investor who meets income or net worth tests to take part in certain private offerings.
- Family office
- A private firm that manages the wealth and investments of one or more wealthy families.
- Carried interest
- A share of investment profits paid to the manager of a fund or SPV, in addition to management fees.
- Private equity
- Investment in companies that are not listed on a public exchange, traditionally through buyouts of mature businesses.
- Secondary market (private)
- The market where existing shares of private companies are traded between holders and buyers, usually with company approval.