A

AIM Companies: Companies listed on the Alternative Investment Market.

All‑Employee Share Plans: Plans available to all eligible employees, including SIPs, SAYE/Sharesave and all‑employee option schemes.

Alternative Investment Fund Managers: Managers of private equity, venture capital, infrastructure and other alternative investment vehicles.

B

Black‑Scholes Model: Mathematical model used to value share options.

C

Carried Interest (Carry): Profit‑sharing mechanism in PE.

Cash‑Settled Awards: Share‑based awards settled in cash.

Co‑Investment Plans: Allows executives to invest alongside investors.

Comparative Remuneration Analyses: Market benchmarking.

Culture: Shared beliefs, values, behaviours shaping performance.

Culture Alignment: Consistency between culture and strategy.

D

Deferred bonus: Is a compensation arrangement where part of an employee’s annual bonus is held back and delivered at a future date, often in shares.

• The employee does not receive the full cash bonus immediately.
• Instead, a portion is deferred and invested into company shares for a set period.
• These shares usually vest after a few years, depending on the rules of the plan.

E

EBT: Trust holding employee shares.

EMI: Tax‑advantaged options.

Equity‑Settled Awards: Awards settled in shares.

Executive Remuneration: Senior pay structures.

Expected Option Life: Estimated period to exercise.

F

Fair Value: IFRS2 valuation basis.

Family Businesses: Privately owned firms.

FCA (Financial Conduct Authority): The UK’s independent regulator for financial services, responsible for protecting consumers, ensuring market integrity, promoting competition, and overseeing firms such as banks, insurers, asset managers, and consumer-credit providers.

Forfeitable Shares: Shares subject to forfeiture.

The Financial Reporting Counsil (FRC): is the UK’s regulator for corporate reporting, audit quality, and governance standards, ensuring transparency, accountability, and trust in the UK’s financial and business environment.

G

General Partner (GP): Manages PE fund decisions.

Governance Advisory: Alignment with governance.

GP Commitment: GP contributed capital.

Growth Advantage Approach: Internal barriers to scaling.

Growth Shares: Shares participating in value growth.

H

Human Capital: Workforce capability.

I

IFRS2: Recognition of fair‑value share‑based costs.

Incentive Plans: Bonus/equity incentives.

The Investment Associate (IA): Represents UK investment managers who oversee more than £9 trillion in assets on behalf of clients worldwide, ranging from pension funds and insurers to institutions and individual savers.

J

JSOPs: Split economic rights in shares.

L

Limited Partner (LP): Capital provider with no control.

Listed Companies Advisory: Public company remuneration.

Long‑Term Incentive Plans: Multi‑year performance share plans.

M

Market‑Based Conditions: TSR, share‑price hurdles.

Market‑Leading Surveys: Remuneration datasets.

Matching Shares: Employer‑matched shares.

Monte Carlo Simulation: Market‑condition valuation.

N

Nil‑Cost Options: Free or minimal‑cost options.

Non‑Market‑Based Conditions: Internal KPIs.

Nil & Partly‑Paid Shares: Low‑cost issued shares.

O

Other Discretionary Share Plans: JSOPs, Growth Shares.

P

Partnership Shares: Pre‑tax SIP purchases.

Performance Share Plans: LTIP awards.

Phantom Options: Cash‑settled equity‑linked incentives.

Portfolio Companies: PE‑owned businesses.

Private Equity: Improving private companies.

Private Equity Remuneration: PE compensation structures.

PE Bonus Structures: Short‑term incentives.

PE LTIs: Long‑term PE incentives.

PE Benchmarking: Market compensation comparison.

PE Culture as a Value Lever: Culture drives PE value.

Q

The Quoted Companies Alliance (QCA): Is the UK membership body representing small and mid-sized quoted companies. It develops and maintains the QCA Corporate Governance Code.  

QCA Corporate Governance Code: A principles-based framework widely adopted by growth-focused issuers, including the majority of AIM-listed companies.

R

Regulatory Landscape: Governance requirements.

Restricted Shares: Conditional shares.

Reward Strategies: Strategic pay structures.

S

SAYE: Savings plans.

Share Incentive Plans: All‑employee tax‑advantaged plans.

Share Options: EMI, CSOP, etc.

Succession Planning: Leadership continuity

T

Total Shareholder Return: LTIP metric.

U

The UK Corporate Governance Code: Provides the core principles of effective governance for premium-listed companies on the London Stock Exchange, setting expectations for board leadership, accountability, remuneration, risk management, and meaningful engagement with shareholders. 

Private Equity Glossary Terms

Fund Structure & Capital

• Committed Capital: The total amount investors agree to provide to a private equity fund over its lifetime.
• Capital Calls (Drawdowns): Requests from the fund for investors to contribute portions of their committed capital.
• Distributions: Payments returned to investors following exits or income events.
• Vintage Year: The year a private equity fund begins investing, used for performance benchmarking.
• Dry Powder: Uninvested capital available for new deals.
• Fund Size: The total committed capital raised by a fund.

Investment & Deal Process

• Deal Pipeline: The flow of potential investment opportunities under review.
• Due Diligence: A detailed assessment of a target company’s financial, legal, and operational position before investment.
• Term Sheet / Heads of Terms: A non-binding summary of key deal terms agreed before drafting full contracts.
• Enterprise Value (EV): A measure of a company’s total value, including equity plus debt minus cash.
• Equity Value: The portion of a company’s value attributable to shareholders.
• Multiple Expansion: Value created when a company is sold at a higher valuation multiple than at acquisition.

Private Equity Strategies

• Buyout: Acquisition of a controlling stake, typically financed with both debt and equity.
• Growth Equity: Investments in scaling companies that require capital but do not typically involve full control.
• Venture Capital: Early-stage investments in high-growth potential businesses.
• Distressed / Special Situations: Investments in companies facing financial or operational difficulty.
• Secondaries: Purchase of existing private equity stakes from other investors.
• Co-Investment (General): Direct investment alongside a private equity fund in a specific deal.

Leverage & Financing

• Leverage (Gearing): The use of debt financing to increase buying power and potential returns.
• Unitranche Financing: A single loan structure blending senior and subordinated debt.
• Mezzanine Debt: Subordinated debt often paired with equity features like warrants.
• Loan-to-Value (LTV): The ratio of debt used relative to a company’s value.

Performance & Return Metrics

• IRR (Internal Rate of Return): The annualised return earned by an investment.
• MOIC (Multiple on Invested Capital): Total value returned divided by capital invested.
• TVPI (Total Value to Paid-In): Combined realised and unrealised value relative to investor contributions.
• DPI (Distributions to Paid-In): Cash returned to investors compared with capital contributed.

Ownership & Governance

• Management Equity: Shares or options held by management to align incentives.
• Shareholder Agreement: A binding document governing shareholder rights and obligations.
• Ratchets: Structures adjusting management’s equity depending on exit performance.
• Drag-Along Rights: Rights allowing majority shareholders to force minority shareholders to join a sale.
• Tag-Along Rights: Rights allowing minority shareholders to participate in a sale initiated by majority holders.

Operations & Exits

• Holding Period: The duration a private equity firm owns a portfolio company.
• Exit Routes: Methods of realising value such as trade sale, secondary sale, IPO, or recapitalisation.
• Carried-Forward Losses: Tax losses retained by a company that may offset future gains.

Fund Operations

• Fund-of-Funds (FoF): A fund investing in multiple private equity funds rather than directly in companies.
• Placement Agent: A firm engaged to help raise capital from investors.
• Key Person Provision: A clause requiring certain senior managers to remain active for the fund to continue investing.
• Hurdle Rate: The minimum return that must be achieved before carried interest is paid.
• Distribution Waterfall: The order in which returns are allocated among investors and the fund manager.