Hands-on/Hands-off

Defines the way an investment is monitored by an investor. The hands-on approach suggests a tighter control and a more active presence in the company vs hands-off, which at the extreme is a sleeping partner position.

Hurdle rate

Average annual return rate above which the private equity fund managers receive a portion of the capital gain realized on the fund. The rate is generally fixed and is close to the no risk rate. Currently around 8% per year.

IPO (Initial Public Offering)

Introduction of a company on the stock exchange.

IRR (Internal Rate of Return)

Average yearly return on an investment. Remains the principal instrument of selection between investment opportunities for a private equity investor.

Key man nsurance

Insurance over key managers subscribed by the company for the benefit of the lenders. Common in LBO transactions.