Founded in 1992 by senior executives with entrepreneurial, line operating, and bulge bracket investment banking experience.
During the month of March 2010, Avalon, as the sole placement agent, raised Frederick's of Hollywood Group Inc. $3mm in common stock and warrants.
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C Corporation
A company whose federal income tax status is based on the company's income as an entity and the taxes are paid by the company.
CPA
A certified public accountant.
Call Rights
The right to buy a certain quantity of a specific security at a specified price (the strike price) up to a specified date (the expiration date).
Certificate of Incorporation (also Articles of Incorporations)
A company's organizational document required to be filed with the Secretary of State in the state in which it is incorporated. The certificate generally notes the name, location and company's purpose; the number, rights, and preferences of it's capital stock; and voting authority of the directors including rights related to redemptions, acquisitions and mergers.
Class
Different classifications of a company's capital stock. Each separate class (i.e., common or preferred) will have specified rights designated in the company's certificate of incorporation and may also be divided into series.
Co-Sale Right, Tag Along Rights or Come Along Rights
An investor's right to sell the investor's own securities at the same time, at the same price, and on the same terms and conditions as another stockholder (generally the controlling stockholder or key management). These rights are usually are eliminated in connection with a qualifying initial public offering (IPO).
Cold Comfort Letter
A letter, generally requested by the underwriter, from a company's independent accountants confirming financial information in the offering memorandum and detailing the accountants' procedures.
Collateral
Security given by a borrower to a lender in connection with a loan. Lenders frequently take collateral in a company's tangible and intangible assets and may require an owner's guarantee. In an asset backed loan, the amount of the loan is often based on the value the lenders place on the collateral, with greater value usually given to inventory, accounts receivable, real property, or buildings and other tangible assets. If the borrower cannot repay the loan when due, or for other reasons there may be an event of default, the lender, after complying with the loan agreement and applicable law, has the right to take possession of the collateral, sell it, and apply the net proceeds to repay the loan.
Come Along Right
See Co-Sale Right
Common Stock
The security of a company that represents the residual economic and ownership interest in a company after payment of all other claim. Preferred stock, subordinated debt, secured debt, and general trade obligations (i.e., trade payables) get paid prior to any proceeds to common stockholders. Each share of common stock represents a proportionate interest in the company. There can be different classes or series of common stock with different voting, dividend or other rights.
Compilation Statement
The minimum level of financial statement preparation by an independent accountant. Compilation statements lack footnotes and other disclosures found in an audited or review statement. A compilation statement verifies only the mathematical accuracy of the financial information that management presents to the accountant and involves no testing of receivables, inventory, or other assets or verification by the accountant.
Consent
Permission from different individuals or entities. Often a company must obtain the consent (or waiver) from a specified percentage of those stockholders who are contractually protected by a covenant to take certain actions otherwise restricted by a covenant.
Conversion Price
The price at which a convertible security (debt or equity) can be converted (exchanged) into another security. If a $100 convertible note has a conversion price of $10, then the holder of the convertible note can exchange the note for 10 shares of common stock (i.e., the amount of the debt divided by the conversion price).
Convertible Debt
Debt that can be converted from debt to equity. In Lieu of repayment of the debt, it is usually advantageous to the holder to convert to common stock if the value of the common stock on conversion exceeds the principal and interest owed on the convertible debt. Convertible debt is similar to convertible preferred stock, but is to be repaid prior to preferred or common stock in the event of a sale or liquidation, thereby providing more senior protection until converted.
Convertible Preferred Stock
A form of preferred stock that grants the holder the right (but not the obligation) to convert the preferred stock into common stock. Convertible preferred stock generally has a liquidation preference in an amount equal to the original purchase price plus any accumulated dividends. Dividends on convertible preferred stock may be paid currently or accumulated depending on the particular company. Convertible preferred stock in a privately-held company often automatically converts to common stock, on a qualifying Initial Public Offering. When a company goes public, the preferred stockholder has generally
achieved a major private equity investment goal of liquidity and no longer needs the economic and contractual protection provided by preferred stock.
Convertible Security
Securities that permit the holder to acquire an equity interest by converting (i.e., exchanging) the original security into common stock. Options, warrants, convertible preferred stock or convertible debt are examples of convertible securities. Convertible preferred stock usually permits the stockholder to choose between receiving a liquidation preference on the preferred stock and converting the preferred stock into common stock. Conversion usually occurs at the election of the holder if the value of the common stock obtained on conversion exceeds the liquidation preference.
Covenants
The negative or affirmative contractual agreements of a company in favor of specified investors (i.e., a particular class of preferred stock or subordinated debt-holders). Affirmative covenants mandate positive actions that a company will perform, such as providing specific financial information to investors. Negative covenants specify actions that a company will not take without consent, such as incurring additional funded debt.
Cumulative Dividend
See Accumulated Dividend.
Cumulative Voting
Rather than casting the same number of votes for each director, cumulative voting allows a stockholder to aggregate all of the stockholder's votes. Thus, if a stockholder owns 20 shares, and three directors are being elected, the stockholder has a total of 60 votes (i.e., the number of shares times the number of directors being elected) which can all be voted for one or more directors. Cumulative voting increases the ability of minority investors to obtain board representation.
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