Private markets glossary

An add-on acquisition, also called a bolt-on, is a company bought by a platform company that a private equity firm or other sponsor already owns.

In private markets, an allocator is an institution or investor that commits capital to fund managers rather than investing in companies directly: public and corporate pension plans, endowments, foundations, sovereign wealth funds, insurers and family offices.

A business development company (BDC) is a closed-end investment company that elects to be regulated under the Investment Company Act of 1940 and must keep at least 70 percent of its assets in eligible investments, chiefly private or small US companies.

A co-investment is a direct, usually minority, investment in a single company made alongside a lead investor such as a private equity sponsor, outside the sponsor's main fund.

A continuation fund is a new vehicle, run by the same general partner, that buys one or more companies from an older fund so the manager can keep owning them after the original fund's term.

A direct lender is a non-bank institution that makes loans to companies and keeps them on its own books instead of distributing them to a broad syndicate of investors.

A family office is a private firm that manages the investments, and often the wider financial affairs, of one wealthy family (a single family office) or a small number of families (a multi-family office).

Form ADV is the uniform registration and disclosure form that investment advisers file electronically through the IARD system, with the SEC under the Investment Advisers Act of 1940 or with state securities regulators.

An independent sponsor is a dealmaker, usually a small team with private equity or operating experience, who finds and negotiates an acquisition without a committed fund behind it.

A NAV loan is a loan to a private fund secured by the net asset value of the fund's portfolio, rather than by its investors' uncalled commitments.

A loan is on non-accrual when the lender stops recording interest income on it because collecting the interest or principal is no longer reasonably assured, typically after payments have fallen well behind.

An outsourced chief investment officer (OCIO) is a firm that runs an institution's investment program with discretion, choosing managers and adjusting allocations within limits the board has set, instead of only advising.

A platform company is the first acquisition a private equity firm or independent sponsor makes in an industry, bought to serve as the base for further acquisitions.

Private credit is lending to companies by investors other than banks, through loans that are negotiated privately and do not trade on public markets.

A registered investment adviser (RIA) is a firm paid to advise others about securities that is registered with the SEC or with one or more state securities regulators.

In private markets, a secondary transaction is the sale of an existing interest in a private fund, or in a portfolio of its assets, from one investor to another.

An unfunded commitment is capital an investor or lender has agreed to provide but that has not yet been drawn.

A unitranche loan combines what would otherwise be separate senior and subordinated debt into one facility, with one blended interest rate and one set of loan documents.