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Latham & Watkin’s Hedge Fund Book Of Jargon

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The legal firm Latham & Watkins LLP popular Book of Jargon online glossary series provides laypeople with insight into a broad range of legal and business terminology across a variety of sectors, including corporate finance, global restructuring, MLPs and hedge funds. The Hedge Fund Book of Jargon covers esoteric terms ranging from “dollar roll” to “equity claw” to “macaroni defense”.

Read on to enjoy a few of the more unusual entries in the Hedge Fund Book of Jargon.

Book of Jargon: All or substantially all

“No one knows exactly what this phrase means. This phrase is used in various Covenants and other contractual provisions, but the precise meaning is the subject of much debate (and litigation). It does not necessarily mean what it sounds like in general layman’s terms. See, for example, Sharon Steel Corp. v. Chase Manhattan Bank, N.A., 691 F.2d 1039 (2d Cir. 1982) and B.S.F. Co. v. Philadelphia National Bank, 204 A.2d 746 (Del. 1964).”

You’ve got to give L&W credit for being honest.

Bear hug letter

“An offer letter by an acquiror to buy a Target Corporation (NYSE:TGT) at a price considerably in excess of the Target’s current share price. Called a Bear Hug because the high price is hard to resist.”

Who doesn’t love a good hug?

Closing dinner

“Your reward. A dinner organized by the bankers and lawyers to celebrate the Closing of the transaction. The better the deal, the better the wine.”

Working for a hedge fund has its perks.

Family office

“A category of Investment Advisers who advise only clients who are all within 10 generations of a common ancestor and such adviser is not required to register with the SEC under the Advisers Act.”

Who knew?

Lady Macbeth strategy

“A takeover tactic used by a third party pretending to be a White Knight. After the third party has gained the Target Corporation (NYSE:TGT)’s confidence, it teams up with the hostile bidders to acquire the Target.”

“Fair is foul, and foul is fair.” I guess Shakespeare’s witches had it right…

Macaroni defense

“A tactic used by a corporation that is the Target of a hostile takeover bid in which the Target Corporation (NYSE:TGT) issues a large number of Bonds that must be redeemed at a higher value if the company is acquired. In the event of a takeover, the debt will expand, just as macaroni expands when cooking.”

They should’ve called this the “drown ’em in dollars defense”.

Most favored nation clause

“An agreement with an investor to provide that investor with terms no less favorable than those provided to any other investors in a Hedge Fund.”

Well, duh!! So I wonder who agrees to be a “less favored nation”?

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