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Internal Rate Of Return: A Simple, Non-Mathematical Explanation
How do venture investors compare investments in portfolio companies when the amounts invested, the timing of those investments, the returns, and the timing of those returns are all different? The tool venture investors use to compare the rates of return on each investment on an “apples-to-apples” basis is the internal rate of return (also known as the compound annual growth rate or CAGR).
A typical venture investment involves several investments into a portfolio company at various stages of the company's development. From an investment perspective, those investments are considered negative cash flow; that is, cash going out from the venture fund. Of course, the cash goes out from the venture fund at different times. Investing $100 today is more expensive to the venture fund than investing $100 in a Series C Preferred Stock round three years from today because the venture fund would only have to put aside, say, $80 today to grow into the $100 needed in three years for the Series C Preferred Stock investment. This $80 is known as the discounted value or the value in “today's dollars” of the $100 investment that would be made in 3 years. Accordingly, any “apple-to-apples” comparison of investments would have to compare investments based on today's dollars.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.