Reference

Special Situations Glossary

Key terms in special situations investing, restructuring, distressed debt, and alternative asset management — defined by practitioners with three decades of institutional experience.

363 Sale

A 363 sale is a court-approved sale of a bankrupt company's assets under Section 363 of the Bankruptcy Code — often the ...

409A Valuation

A 409A valuation is an independent appraisal of a private company's common stock fair market value — required by the IRS...

Alternative Investment

Alternative investments are asset classes outside traditional stocks, bonds, and cash — including private equity, ventur...

Assignment for the Benefit of Creditors (ABC)

An ABC is a state-law alternative to formal bankruptcy in which a distressed company transfers its assets to a neutral t...

Busted Portfolio

A busted portfolio is a collection of venture capital or private equity investments that have declined significantly in ...

Carve-Out

A carve-out is a transaction in which a parent company separates a business unit and sells a partial or complete interes...

Corporate Restructuring

Corporate restructuring is the process of reorganizing a company's capital structure, operations, or legal form to addre...

Corporate Restructuring vs. VC Restructuring

Understanding the key differences between conventional corporate restructuring and VC-backed company restructuring — cap...

DIP Financing

DIP financing — Debtor-in-Possession financing — is specialized credit extended to companies in Chapter 11 bankruptcy, a...

Distressed Debt

Distressed debt refers to bonds, loans, or other debt instruments of financially distressed companies — typically tradin...

Distressed Equity

Distressed equity refers to stock or equity interests in financially distressed companies — including post-reorganizatio...

Family Office

A family office is a private wealth management firm serving one or more ultra-high-net-worth families — an increasingly ...

Forbearance Agreement

A forbearance agreement is a contract in which a creditor temporarily refrains from exercising remedies against a defaul...

Illiquid Asset Management

Illiquid asset management is the specialized discipline of managing assets that cannot be readily converted to cash — re...

Kovel Letter

A Kovel letter extends attorney-client privilege to a non-attorney expert — such as a financial advisor or restructuring...

Measuring Risk in Special Situations

Risk measurement in special situations requires frameworks beyond conventional portfolio metrics — accounting for event ...

Pension Plan Sponsor

A pension plan sponsor is the employer or entity that establishes and maintains a pension plan — bearing fiduciary respo...

Portfolio Doctor

A portfolio doctor is an advisor who diagnoses and treats distressed companies within a venture capital or private equit...

Pre-Seed Financing

Pre-seed is the earliest stage of startup financing — before formal seed rounds — typically involving small checks from ...

Proxy Voting

Proxy voting is the process by which shareholders exercise voting rights at corporate meetings through designated agents...

Qualified Professional Asset Manager (QPAM)

A QPAM is a financial institution meeting specific ERISA requirements, entitling it to manage pension plan assets under ...

Relative Value

Relative value investing identifies mispricings between related securities — such as different tranches of the same capi...

Reorganization

A corporate reorganization is a formal legal process — typically Chapter 11 bankruptcy — in which a distressed company r...

Runway

In startup finance, runway refers to the number of months a company can operate at its current burn rate before exhausti...

Series A Financing

Series A is typically the first significant institutional VC round for a startup — following pre-seed and seed rounds — ...

Series B Financing

Series B is the second major institutional VC round — following Series A — used to scale proven business models and expa...

Series Seed Financing

A seed round is the first formal institutional funding round for a startup — typically ranging from $500K to $3M — used ...

Special Situations Investment

Special situations investing focuses on opportunities created by extraordinary corporate events — distress, restructurin...

Spinoff

A spinoff is a corporate transaction in which a parent company distributes shares of a subsidiary to its existing shareh...

Split-Off

A split-off is a corporate transaction in which a parent company offers shareholders the option to exchange parent share...

Strategic Alternatives

A strategic alternatives process is the formal board-level evaluation of all available options for maximizing stakeholde...

Turnaround

A corporate turnaround is the process of reversing a company's decline — stabilizing operations, addressing the root cau...

VC Fund

A venture capital fund is a pooled investment vehicle that raises capital from institutional and individual investors to...

VC Restructuring

VC restructuring is the specialized practice of restructuring venture-backed companies — addressing their unique capital...

Workout

A workout is a negotiated, out-of-court resolution of a distressed debt situation designed to maximize recovery for cred...

§3(21) vs. §3(38) Fiduciary Status

Under ERISA, §3(21) and §3(38) fiduciary designations define the scope of an investment advisor's responsibility — with ...