Private equity is now an established part of the financial landscape, with $432bn raised in the asset class in 2006 alone. The last decade has seen private equity funds make headline news as they bid for ever larger companies and come under increasing public scrutiny. This Euromoney Training course is specifically designed to enable you to understand, and apply the tools and techniques specific to this asset class.

This course will review the critical aspects of private equity, covering all the key concepts. There will be analysis of several private equity deals and leveraged buyouts, including European and Asian transactions. There will be a specific focus on transaction valuation, structuring, funding and mitgation

How will this course assist you?

On completing this 3-day the course you will gain:

• An analytical "toolbox" for assessing the attractiveness of
  potential private equity transactions.
• A suite of valuation methodologies for assigning values to
  potential private equity opportunities.
• Knowledge of the variety of financing instruments and
  structures for funding private equity transactions.
• Knowledge of the investor types providing debt and equity
  funding for private equity deal.

Who should attend?

• Corporate Management Teams
• Corporate Developers
• Investment Bankers
• Venture Capitalists
• Accountants
• Lawyers

Supported by:

DAY 1

Introduction; fundamental analysis in private equity contexts; valuation

• Transaction types: LBOs, MBOs, “growth equity”.
• Target screening.
• Key industry/sector-level characteristics.
• Key firm-level characteristics.
• Business strategy assessment.
• Business mix, growth goals.
• Margin targets.
• Capital investment (including R&D).
• Aggressive? Conservative? Realistic?
• Agency problems.
• Operating risk management.
• Financial performance assessment: The Troika: growth, margins and capital use.
• Financial strategy assessment: Cash generation and capital use.
• Historical capital structure, target capital structure, current.

Capital structure

• Current funding modes and sources: debt vs. equity /fixed vs. floating.
• Financial risk management.
• Does the financial strategy support the business strategyor vice-versa?
• Post-closure sources of value-added.
• Improved fundamental performance: cost controls, improved.
• Working capital management, discipline in capital.
• Expenditure, management incentives.
• Forecasts: debt capacity and future cashflows.
• “Topline” revenue growth rate projections.
• Forecasting margins.
• Forecasting capital expenditures and other capital outlays.
• Forecasting debt service burdens.
• Levered equity cashflows.
• Return requirements and discount rates.
• Target IRRs.
• Other return measures.
• Exit strategies: “harvesting” returns.
• Strategic buyers.
• Financial buyers.
• Public market exit.

Private equity in the European and Asian contexts

• The role of strategic corporate investors.
• Public market funding for highly-leveraged companies.
• Private equity operations of diversified public firms.
• “Growth equity”.
• Sources of value in private equity.
• Target valuation.
• Valuation methodologies.
• “Entry” pricing vs. expected “exit” valuations.
• Net asset value.
• Price/book value.
• Enterprise value / replacement cost.
• Comparable transactions.
• Operational metrics.
• Discounted cashflow approaches: building DCF forecasts, terminal value assumptions, discount / capitalisation rates.
• Debt capacity and debt / EBITDA ratios.

Case studies:

• Private equity framework.
• A potential LBO: Marks & Spencer PLC.
• The first Japanese LBO.
• GOME: strategic partnership between GOME and Warburg Pincus.
• Equity valuation matrix.
• Weiqiao textile: LBO and sum-of-the-parts analysis.

Day 2

Executing private equity opportunities – transaction structure

• Debt funding.
• Bank and other senior debt.
•  Bridge funding.
• Subordinated and other long-term debt finance.
• Securitisation and structured finance.
• Credit analysis and credit ratings.
• Equity-linked debt.
• Mezzanine funding.
• Convertible securities.
• Equity funding.
• Private equity, LBO and VC managers.
• Private market.
• Use of funds: capital structure and returns.
• Debt/equity mix.
• Equity-linked securities and dilution impacts: warrants-with-debt, convertibles, pay-in-kind securities.
• Transaction process.
• Due diligence, deal documentation and structuring.
• Exit strategies: “Harvesting” returns.
• Strategic buyers.
• Financial buyers.
• Public market exit.
• Risk management in private equity.
• Liability management.

Case studies:

• Progress power.
• Sources of debt financing: leveraged loans and high yield bonds.
• Credit analysis and ratings.
• Bond ratings systems.
• S&P medians.
• Mezzanine debt and mezzanine funds.
• Stapled financing and other committed financing.
• ACAS business loan trust 2004-1.
• Due diligence checklist.

Day 3

Funding private equity investment – investors

• Private equity as an asset class:
• Purpose in a portfolio: risk, returns, liquidity, timehorizons, taxes.
• Private equity strategy types.
• Leveraged buy-outs and management buy-outs.
• Strategic investments and equity “carve-outs”.
• Mezzanine funds: PIK, equity-linked, and coupon instruments.
• Secondary and “vintage” funds.
• “Growth” equity and “activist” hedge funds.
• Sources of funds: debt.
• Loans: bilateral loans, syndicated loans, leveraged loans, bridge lenders.
• Mezzanine lenders.
• The private placement market and public high-yield.
• CLOs/CDOs.
• Sources of funds: equity managers and equity providers.
• Managers of equity funding: LBO sponsors, private equity managers, venture capital managers, and other alternative asset managers.
• Sources of equity funding: the role of pension funds, insurers, endowments, HNW individuals, and other providers of private equity.
• Alternative sources of funds: strategic investors and “activist” hedge funds.
• Private equity sources of returns/manager value added.
• Timely entry: attractive entry valuations due to market conditions, motivated sellers.
• Financial: aggressive substitution of debt for equity, with careful cashflow management.
• Operational: post-closure performance improvement due to enhanced managerial resources, more highly-motivated management and workers.
• Strategic: growth to critical mass in a consolidating sector.
• Timely exit: sale to motivated strategic or financial buyers, or to public market in an environment of multiple expansion.
• Private equity managers: organisational structures and associated funds flows.
• General vs. limited partners.
• Legal: specified life, withdrawal prohibitions, transfer restrictions, liability.
• Capital flows: “takedown” schedules, capital calls, distributions.
• Manager fees and compensation, reporting and accounting policies.

Case studies

• “Growth” private equity: TPG Texas Pacific, General Atlantic, and Newbridge Capital Investment in Lenovo.
• DLJ merchant banking partners Stake in Hard Rock Hotels.
• An Asia restructuring idea: Korea Tobacco and Ginseng.
• Japanese event-driven trades.
• Equity sources: Goldman Sachs, Capital Partners.

• Andrew Regan

  Andrew Regan, CFA served as an investment banker at Merrill Lynch and as a securities analyst at Donaldson, Lufkin, and Jenrette, where he counselled large institutional investors on their retail sector holdings.
  
  In addition to these conventional sell-side duties, he was centrally engaged while at DLJ in a number of banking transactions involving retailers, including LBOs, IPOs, primary and secondary equity offerings, and private placements. He also assisted in the successful recapitalisation of a major real estate portfolio in the Silicon Valley area of California.
  
  As an experienced training consultant, Mr Regan provides pedagogical support to organisations in the theory and practice of corporate finance and asset markets In his teaching work, he develops overall curricular strategies, prepares case and other instructional materials, delivers programs in the classroom, and offers follow-up evaluation.
  
  He has delivered programs for clients throughout North America as well as Europe, Latin America, Asia, Africa, and the Middle East. 
  
  Andrew received his A.B. magna cum laude in Modern European History from Harvard College, his M.Sc., with Distinction, in West European Politics from the London School of Economics, and his M.B.A., with High Honors, from Harvard Business School, where he was a George F. Baker Scholar, Charles M. Williams Fellow, and Dean's Doctoral Award Winner. He holds the CFA Charter.

Private Equity

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

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