Mastering private equity : transformation via venture capital, minority investments & buyouts PDF
Preview Mastering private equity : transformation via venture capital, minority investments & buyouts
Mastering Private Equity TRANSFORMATION VIA VENTURE CAPITAL, MINORITY INVESTMENTS & BUYOUTS Claudia Zeisberger Michael Prahl Bowen White This edition first published 2017 © 2017 Claudia Zeisberger, Michael Prahl and Bowen White Registered office John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher. Wiley publishes in a variety of print and electronic formats and by print-on-demand. 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Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom. If professional advice or other expert assistance is required, the services of a competent professional should be sought. Library of Congress Cataloging-in-Publication Data Names: Zeisberger, Claudia, author. | Prahl, Michael, author. | White, Bowen, author. Title: Mastering private equity : transformation via venture capital, minority investments & buyouts / Claudia Zeisberger, Michael Prahl, Bowen White. Description: Hoboken : Wiley, 2017. | Includes index. | Identifiers: LCCN 2017013988 (print) | LCCN 2017014649 (ebook) | ISBN 9781119327943 (pdf) | ISBN 9781119327981 (epub) | ISBN 9781119327974 (paperback) | ISBN 9781119327943 (ebk) | ISBN 9781119327981 (ebk) Subjects: LCSH: Private equity. | Venture capital. | Capital investments. | Consolidation and merger of corporations. | BISAC: BUSINESS & ECONOMICS / Finance. Classification: LCC HG4751 (ebook) | LCC HG4751 .Z42 2017 (print) | DDC 658.15/224—dc23 LC record available at https://lccn.loc.gov/2017013988 ISBN 978-1-11932797-4 (hardback) ISBN 978-1-11932794-3 (epdf) ISBN 978-1-11932798-1 (epub) Cover design: Wiley Cover image: (c) jps/Shutterstock CONTENTS List of Contributors Foreword Preface A Note from Claudia Zeisberger How to Use This Book Section I: Private Equity Overview 1: Private Equity Essentials Private Equity Funds Defined The GP Perspective The LP Perspective The Fee Structure and Economics of PE Closing Relevant Case Sudies References and Additional Reading Notes 2: Venture Capital Venture Capital Defined Start-up Development The Venture Capital Investment Process For the First-time Entrepreneur Closing Relevant Case Studies References and Additional Reading Notes 3: Growth Equity Growth Equity Defined Growth Equity Targets The Growth Equity Investment Process Minority Shareholder Rights Closing Relevant Case Studies References and Additional Reading Notes 4: Buyouts Buyouts Defined Leveraged Buyout Funding Management Teams in a Buyout Types of Buyout Transactions Closing References and Additional Reading Notes 5: Alternative Strategies Distressed Private Equity Real Assets Closing References and Additional Reading Notes Section II: Doing Deals in PE 6: Deal Sourcing & Due Diligence Generating Deal Flow Due Diligence Considerations The Due Diligence Process Due Diligence Areas Closing References and Additional Reading Notes 7: Target Valuation The Valuation Toolkit Venture Capital Growth Equity and Buyouts More on Valuation Multiples Closing References and Additional Reading Notes 8: Deal Pricing Dynamics Bidding for a Deal Buyout Pricing Adjustments and Closing Mechanisms Post-closing Price Adjustments and Remedies Closing References and Additional Reading Notes 9: Deal Structuring Buyout Funding Instruments Investment Structures and SPVs Closing Relevant Case Studies References and Additional Reading Notes 10: Transaction Documentation PE Transaction Documentation Buyout Debt Documentation Equity Documentation Closing References and Additional Reading Notes Section III: Managing PE Investments 11: Corporate Governance Sense of Urgency Private Equity as Active Owners Alignment of Interest Closing Relevant Case Studies References and Additional Reading Notes 12: Securing Management Teams Working with Management Working with PE OWNERS Management Compensation Plans Aligning VC FUNDS and Entrepreneurs Closing Relevant Case Studies References and Additional Reading Notes 13: Operational Value Creation The Value Creation Roadmap Resources for Operational Value Creation Measuring Operational Value Creation Closing Relevant Case Studies References and Additional Reading Notes 14: Responsible Investment Responsible Investment Defined ESG in Today’s PE Industry The Challenge of Measuring Impact Emerging ESG Frameworks ESG in Emerging Markets Closing Relevant Case Studies References and Additional Reading Notes 15: Exit Exit Considerations Preparation for Sale—Exit Shaping Exit Paths Closing Relevant Case Studies References and Additional Reading Notes Section IV: Fund Management and the GP–LP Relationship 16: Fund Formation Setting up a PE Fund Fund Vehicles Limited Partnership Agreement Closing Relevant Case Studies References and Additional Reading Notes 17: Fundraising The GP Fundraising Process Fundraising Documentation The Fundraising Roadmap Closing Relevant Case Studies References and Additional Reading Notes 18: LP Portfolio Management Deciding on an Allocation to PE Portfolio Construction Considerations PE Fund Manager Selection Managing an Existing PE Portfolio Closing Relevant Case Studies References and Additional Reading Notes 19: Performance Reporting Interim Fund Performance The IRR Conundrum Closing Relevant Case Studies References and Additional Reading Notes 20: Winding Down a Fund Liquidating a PE Fund End-of-Fund-Life Options Zombie Funds Closing References and Additional Reading Notes Section V: The Evolution of PE 21: LP Direct Investment Going Direct Attractions of Co-investing Risks of Co-investing Implementation Challenges Going Direct Closing References and Additional Reading Notes 22: Listed Private Equity Listed PE Firms Listed PE Funds Closing Relevant Case Studies References and Additional Reading Notes 23: Risk Management Asset Class Risk Portfolio Risk Fund Manager Risk Direct Investment Risk Risk Management for GPs Closing Relevant Case Studies References and Additional Reading Notes 24: Private Equity Secondaries Main Transaction Types Deal Structuring Executing Secondaries Transactions Closing Relevant Case Studies References and Additional Reading Notes 25: Evolution of Private Equity PE–How We Got Here PE—Can it Remain Attractive? Private Equity—Quo Vadis
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