Finance:Vintage year

Short description: Year in which a fund began investing

Vintage year in the private equity and venture capital industries refers to the year in which a fund began making investments or, more specifically, the date in which capital was deployed to a particular company or project. This metric is useful for benchmarking, identifying trends, estimating the holding period, and controlling returns for the effect of business cycles.

Origin

Most likely, the term vintage year is borrowed from the winemaking industry, where it is also used to divide wines in comparable classes.

Overview

The year of investing is an important and widely used metric to compare performance of the investments financed in the year in question against that of the investments financed in other years or against that of the general market (S&P 500). As the external market conditions change following the overall business cycle, so does performance of investments. Therefore, returns of 50% on investments done in good years are not directly comparable to returns of 10% done in crisis years. That is why a vintage year is taken into account. The returns are comparable if investments share approximately the same timing.

External links

• 2012 could be a good vintage year for private equity investments
• Private Equity: The Propaganda versus the Facts
• Measuring returns in Private Equity
• Equity Release Calculator

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Buyout	Financial sponsor Management buyout Divisional buyout Buy–sell agreement Leveraged recapitalization Dividend recapitalization
Venture	Angel investor Business incubator Post-money valuation Pre-money valuation Seed money Startup company Venture capital financing Venture debt Venture round
Structure	Private equity firms and funds Limited partnership Limited liability company Carried interest Management fee Publicly traded private equity Business Development Company Venture capital trust Private investment in public equity (PIPE) Pledge fund

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| group5 = Related financial terms | list5 =

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• Vintage year

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