Private equity (PE) has become one of the world’s largest asset classes for investors. It is estimated that 10 percent of UK private sector workers work in companies connected in some way to PE. This course covers institutional investing into private, rather than public listed, companies, where the shareholder can then not expect an exit for at least 3 to 10 years.
The course defines the types of PE (Venture Capital (VC), growth capital, Leveraged Buy Out (LBO)) and talks about the role of PE in a diversified investment portfolio. It explains how PE funds are constructed and how they conduct deals including the decision making process before investing and areas of due diligence conducted. The goal of a PE investor is a high Internal Rate of Return (IRR) on deals and the course outlines what IRR and Multiple of Invested Capital (MoIC) is and how it is achieved.
On completion of this course, participants will have a greater understanding of:
- What is Private Equity (PE)?
- How the main types of PE differ – Venture Capital, Growth Capital, Leveraged Buy Out (LBO)?
- Some of the main participants in the London PE industry. Examples of large UK buyouts and what are Unicorns?
- The role of PE in a diversified portfolio of assets and publicly available performance data for PE funds.
- The structure of PE funds – Limited Partners (LPs) and General Partner (GP). What are the fees and what is carried interest?
- PE transaction process up to investing in a company: sourcing, due diligence, negotiation.
- What the terms Internal Rate of Return (IRR) and Multiple of Money (Multiple of Invested Capital – MoIC) mean
- What pre money and post money valuations in VC funding rounds mean. How they are related
- How a PE firm increases IRR for an investment? What is the principle of leverage in structuring LBOs?
- What Sweet & Sweat Equity is. What ‘hurt money’ is. What a ratchet is.
Authored by: John Bolitho
John Bolitho worked for over 20 years in City of London firms as: a quoted equity fund manager; private equity and VC executive; founder of a corporate finance M&A advisory firm. He has taught courses in these areas for over 10 years to audiences of financial service professionals. He is a Sloan Fellow (M.Sc. in Management, with Distinction) of the London Business School and is a CFA charter holder.
CPD Points: 1
CPD Duration (hours): 1
Access: 12 months from purchase date