General Information
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Target Audience
This course is aimed at students planning to work for a private equity firm or merchant bank, or those who will have direct dealings with private equity firms, including investment bankers, credit providers and managers working at companies where private equity may be a source of capital.
Format
This is a case-based course. Students will be expected to prepare each weekly case in advance, and come to class ready to be actively involved in the case discussion and analysis. The cases will be augmented at times with lectures.
Course Mission
The course aims to give students an understanding of the role private equity plays in financial markets, how the sector has evolved, and how it is structured and operates. In addition, students will learn how private equity has become a unique asset class in the portfolios of many pension funds, university endowments and wealthy individuals, and what expectations/returns are embodied in such investments.
The unique terminology, expected returns and challenges facing private equity funds are all examined. The curriculum is arranged to follow the lifecycle of a private equity fund, from structuring the fund and securing commitments from investors, through to investing in and managing a portfolio of companies and, finally, exploring the various means used to exit from investments.
Course Scope
The course is divided into three sections, with the following learning outcomes:
- Fund Structuring and Fees
- Describe the structure of a private equity fund
- Explain the fundraising process, and identify typical PE investors
- List the types of fees charged by PE funds, and calculate the net returns to investors
- Making PE Investments
- List the criteria private equity investors use to evaluate a potential investment
- Calculate the expected returns of investments in venture capital, growth and development investments, and leveraged buyouts
- Build a leveraged buyout model to calculate the internal rate of return to a private equity investor
- Explain the role of the PE firm in monitoring and managing their investments
- Exiting from PE Investments
- Describe the main exit alternatives available to PE funds
- Evaluate potential exits, including identifying any issues or potential conflicts that may arise
Evaluation and Grade Breakdown
| Component | Due Date | Weight |
|---|---|---|
| Class Participation | Ongoing | 20% |
| Case Write-Ups | Weekly | 30% |
| Final Exam | During Exam Period | 50% |
Required Resources
- Case and readings package
- Textbook: Private Equity as an Asset Class, 2nd Edition, Guy Fraser-Sampson, published by John Wiley & Sons, 2010.