DESCRIPTION
Private equity ("PE") pool funds of capital invested in businesses, which come with a fixed investment horizon, at which point the PE firm exits the investment. Exit strategies include IPOs and the sale of the business to another PE firm or strategic buyer.
PE funds are focused on the long-term potential of the portfolio of companies they hold an interest in or acquire.
Institutional funds constitute the primary sources of private equity funds, as they provide substantial capital for extended periods of time. Investment professionals from a particular PE firm raises and manages the funds.
PE funds typically fall into two categories: Venture Capital and Buyouts.
This Guide covers the following aspects of a PE deal:
1. What do PE Houses look for in a deal
2. Management Buy-Outs
3. Growth Capital
4. The Business Plan
5. How PE Houses make money including earnings structure
6. Exits
The value of this Guide is in its practical awareness of matters pertinent to PE Houses to facilitate better-informed debate, in private equity's effective engagement with stakeholders, and awareness among business owners of private equity as a potential source of sustainable finance for growth.
This Guide, used in conjunction with the Business Valuation Guide and Valuation Model represent useful resources to investment professionals and business owners alike.
This Guide delves into crucial aspects of driving shareholder value, including profit growth and PE arbitrage. It highlights the nuanced risks in early-stage funding versus MBO markets and why PE houses favor MBOs. Detailed rules for MBOs, growth capital strategies, and PE assessments are covered. The PPT also explores the structure of PE investments, how PE houses generate returns, and the importance of IRR and timelines. Exit planning is emphasized, with insights into value drivers and management succession. This resource is essential for those seeking a comprehensive understanding of private equity dynamics.
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Source: Best Practices in Fundraising, Private Equity PowerPoint Slides: Private Equity Funding Guide PowerPoint (PPT) Presentation, Corporate Finance 101
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