What does it all mean?

LIQUIDATION PREFERENCE

ANALYST

something about how proceeds are paid if company is sold or liquidated

ASSOCIATE

written in the term sheet for most VC and some private equity deals, an investor with liquidation preference will get paid in-full before any other investors

Preferred stock investors often have this preference which can go to 2X so this investor gets paid back twice their initial investment before other investors such as common stock holders get any remaining proceeds

know who at the table has a liquidation preference, they may have an incentive to sell knowing they will be paid first leaving little or nothing for others

ATTACHMENT POINT

ANALYST

something about separation between senior and junior credit investors

ASSOCIATE

common in private credit and direct lending (and structured credit like CLO) showing coverage available to senior investors compared to junior investors

often expressed as a percentage of loan-to-value (LTV), eg: 75% LTV attachment point is senior then below this is junior debt

be aware as private credit market has boomed as banks have stepped away from lending, many private credit LP and interval funds have formed

ADD SOME COLOR

ANALYST

something about making a deal or offering sound more interesting

ASSOCIATE

if the facts and features (terms, pricing) don't create interest among investors, find something topical and interesting to say about the company

the bond offering is only 100 over but the company is becoming a clean energy (insert buzz word here) leader

find a way to connect it to AI so we can get it circled

ALPHA, NOT BETA

ANALYST

something about a fund outperforming an index

ASSOCIATE

beta is just how the fund performs with the market and alpha is how it performs better or worse than the market

if market is up 10% and fund is up 11%...the 10% is due to beta and the 1% is alpha. Don't pay for beta, but alpha is rare and valuable

just give me beta so i don't risk blowing up the client relationship