Well, I was not that great in following finance markets. Now that we are in Ox hearing about and attending all these finance lectures - here are a few short definitions (courtesy: wikipedia.com). These are in no way comprehensive, but a good start..
Private equity is a broad term that refers to any type of
equity investment in an asset in which the equity is not freely tradable on a public
stock market. Passive institutional investors may invest in
private equity funds, which are in turn used by private equity firms for investment in target companies. Categories of private equity investment include
leveraged buyout,
venture capital,
growth capital,
angel investing,
mezzanine capital and others. Private equity funds typically control management of the companies in which they invest, and often bring in new management teams that focus on making the company more valuable.
Venture capital is capital typically provided by outside investors for financing of new, growing or struggling businesses. Venture capital investments generally are high risk investments but offer the potential for above average returns. A venture capitalist (
VC) is a person who makes such investments.
Investment banks help companies and governments and their agencies to raise in raising funds in the
capital markets (both
equity and
debt)
The
capital market (securities markets) is the
market for
securities, where
companies and the
government can raise long-term funds. The capital market includes the
stock market and the
bond market.
An
angel investor is an affluent individual who provides capital for a business
start-up, usually in exchange for
ownership equity. Unlike
venture capitalists, angels typically do not manage the pooled money of others in a professionally-managed
fund. However, angel investors often organize themselves into angel networks or angel groups to share research and pool their own
investment capital
Generally, a
hedge fund is a lightly regulated private
investment fund often characterized by unconventional investment strategies and often making use of legal structures (sometimes offshore) to mitigate the effects of local regulation and tax regimes. In contrast to regular investment funds, which are usually limited to only being able to "go long" (buy) instruments such as
bonds,
equities or
money markets, hedge funds also have the ability to "short" (sell) instruments which they believe will fall in price. In this way, hedge funds are able to create more complex investment structures which can, for example, profit in times of market volatility, or even in a falling market. In
finance, a hedge is an investment that is taken out specifically to reduce or cancel out the
risk in another investment.
The phrase mergers and acquisitions or
M&A refers to the aspect of
corporate finance strategy and
management dealing with the merging and acquiring of different
companies. Historically,
Investment Banks (intermediaries which assist companies in selling ownership of themselves as stock or borrowing money directly from investors in the form of bonds) have been closely associated with merger and acquisition activity since a M&A is a sales opportunity for the Investment Bank. If the company wants to merge with another, it must attain a fair market value for its shares to be swapped which would involve an investment bank. If it wants to buy the other company with borrowed money, it would most likely borrow directly from investors in the form of bonds through a private placement, engineered by the investment bank. Thus, Investment Banks position themselves to act as advisors on mergers and acquisitions.
