Fundamentals of Private Equity and Venture Capital - PEI Media

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Published in September 2007 by: PEI Media Second Floor Sycamore House Sycamore Street London EC1Y 0SG United Kingdom Telephone: +44 20 7566 5444 © 2007 PEI Media Ltd. ISBN 1-904696-50-3 978-1-904696-50-6 This publication is not included in the CLA Licence so you must not copy any portion of it without the permission of the publisher. All rights reserved. No parts of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopy, recording or otherwise, without the prior written permission of the publisher. The views and opinions expressed in the book are solely those of the authors and need not reflect those of their employing institutions. Although every reasonable effort has been made to ensure the accuracy of this publication, the publisher accepts no responsibility for any errors or omissions within this publication or for any expense or other loss alleged to have arisen in any way in connection with a reader's use of this publication. This module is part of a series of 10 modules entitled The fundamentals of private equity. The modules in this series are: Module 1 Module 2 Module 3 Module 4 Module 5 Module 6 Module 7 Module 8 Module 9 Module 10 Glossary What is private equity and venture capital? Private equity as an asset class Structuring and raising a fund Venture and development capital Management and leveraged buyouts Private equity real estate and infrastructure Due diligence Aftercare and exits Secondaries and their alternatives Running a private equity firm A comprehensive list of private equity terms and definitions To order any of the modules in this series, please contact Private Equity International on: +44 20 7566 5444. ii THE FUNDAMENTALS OF PRIVATE EQUITY COPYING WITHOUT PERMISSION IS UNLAWFUL
Contents About the author iv Getting the most out of this module 5 Introduction 5 Aftercare 5 Protecting value 5 Reporting structure 6 Modern trends in reporting 6 Informal reporting 6 Board structure and composition 7 Executive directors 7 Non-executive directors 7 Representing the investor 7 Monitoring progress and performance 7 Contributing to growth and development 8 Characteristics of the effective non-executive 8 Board committees 8 The chairman and board meetings 8 Operating partners 9 Aftercare – who does it 9 Underperformance 10 Causes of underperformance 10 Addressing underperformance 10 Anticipation 10 Analysis 10 Action 11 Follow-on investments 11 Fund reporting 11 Annual report 11 Valuation 12 The valuation process 12 Calculating the enterprise value 12 The multiple 13 The earnings figure 13 EBITDA multiples 13 Early stage companies 13 Calculating the value of the fund’s investment 13 Structuring issues 14 Exits 14 Types of exit 15 Stock market flotation (IPO) 16 The secondary buyout 17 Re-leveraging 17 Summary 18 COPYING WITHOUT PERMISSION IS UNLAWFUL THE FUNDAMENTALS OF PRIVATE EQUITY iii
Page 1 and 2: THE FUNDAMENTALS OF PRIVATE EQUITY
Page 3 and 4: Contents About the author iv Gettin
Page 5 and 6: GETTING THE MOST OUT OF THIS MODULE
Page 7 and 8: Module 2: Private equity as an asse
Page 9 and 10: About the author Garry Sharp - inde
Page 11 and 12: Exhibit 3: Distribution when one fu
Page 13 and 14: Module 3: Structuring and raising a
Page 19 and 20: Module 4: Venture and development c
Page 25 and 26: Module 5: Management and leveraged
Page 31 and 32: Module 6: Private equity real estat
Page 35 and 36: preceded the private equity hotel c
Page 37 and 38: Module 7: Due diligence COPYING WIT
Page 43: Module 8: Aftercare and exits COPYI
Page 49 and 50: Module 9: Secondaries and their alt
Page 55 and 56: Exhibit 7: Secondary private equity
Page 57 and 58: Published in September 2007 by: PEI
Page 59 and 60: About the author David Huckfield -
Page 61 and 62: of members including representative
Page 63 and 64: Published in September 2007 by: PEI
Page 65: The Fundamentals of Private Equity

Fundamentals of Private Equity and Venture Capital - PEI Media

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