Fundamentals of Private Equity and Venture Capital - PEI Media

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About the author Garry Sharp – independent practitioner, consultant, writer and trainer Garry Sharp has 22 years’ experience as a practitioner, consultant, writer and trainer in the private equity and venture capital markets. He joined independent venture capital company Baronsmead in 1985, becoming a director and shareholder following Baronsmead’s own management buyout in 1989. During the early 1990s the company grew to become one of the UK’s largest independent private equity firms and was acquired by fund manager Ivory & Sime in 1996. Shortly thereafter Garry left to co-found Independent Direction, a specialist consultancy to the private equity industry. He sold Independent Direction in 2005 to concentrate on training and writing, and continues to work in an advisory capacity in private equity. Garry has trained newcomers to private equity since 1990, and delivers courses in Western and Eastern Europe, the Middle East and a wide range of African countries. His first book, The Insider’s Guide to Venture Capital, was published in 1990, followed by five more on private equity, M&A and corporate finance. iv THE FUNDAMENTALS OF PRIVATE EQUITY COPYING WITHOUT PERMISSION IS UNLAWFUL
GETTING THE MOST OUT OF THIS MODULE Welcome to Module 8 in the Fundamentals of private equity series. This module focuses on the aftercare and exit aspects of the private equity cycle. It is designed to work both as a stand alone section and as part of the whole series. The module necessarily draws upon topics reviewed in earlier modules, and seeks to avoid repetition of their content. However, for the benefit of the stand alone reader, a comprehensive glossary has been incorporated, which explains the background and use of private equity terminology. All terms which may require explanation or expansion are printed in bold, to indicate that there is a glossary entry for them. Introduction The culmination of the investment process – dealflow generation, appraisal, negotiation, due diligence, legal documentation and, finally, completion of the investment – marks the beginning, and not the end, of the investment cycle. Whilst selection and structuring are critical to private equity success, it is once the investment has been made that the creation and realisation of value begins. The investor’s contribution to value creation lies in the approach to, and implementation of, aftercare, and he will play a key role in the realisation of this value through driving the exit process. Aftercare The aftercare function is driven by two key objectives: • protecting the value of the investment; and • adding and realising value. Exhibit 1 summarises the key aspects of the investor’s role during the life of the investment. Protecting value Validating The period immediately following completion of an investment can represent, for the investor, the Exhibit 1: Aftercare priorities and the investor’s role Reporting regime Progress reporting Board structure Validating Financial reporting Management appraisal Protecting Testing Monitoring EXIT VALUE Adding Creating Realising Strategy development Operational enhancements Acquisitions Management development Financing growth Exit routes Exit strategy COPYING WITHOUT PERMISSION IS UNLAWFUL THE FUNDAMENTALS OF PRIVATE EQUITY 5
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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 and 44: Module 8: Aftercare and exits COPYI
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Page 55 and 56: Exhibit 7: Secondary private equity
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Page 59 and 60: About the author David Huckfield -
Page 61 and 62: of members including representative
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Fundamentals of Private Equity and Venture Capital - PEI Media

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