Career Focus

This is an advanced corporate finance course focused on the private equity (PE) industry as a whole. The course does not cover venture capital or real estate segments of PE; however, it offers a deep dive into growth equity and buyouts, as well as private debt, distress investing, and some energy and infrastructure. The course also illustrates how these strategies are adjusted depending on the geographical focus. Case settings will focus not only on North America and Europe, but will also explore the forces in emerging markets that affect the strategies employed by PE organizations.

The goal of the class is to understand sources of risk-adjusted value-add in the private equity space as well as institutional features of the industry, and recent developments. The students will gain exposure to a set of practical skills including deal assessment and due diligence, valuation, deal execution, capital structure, governance, restructuring, and risk management issues. In addition, a substantial part of the course will be spent on strategic elements of the deal making. Guests will attend many of the classes.

Structurally, the biggest part of the course integrates a range of topics from an investor’s (PE) perspective. The last module will dive into understanding PE compensation structure, fund of funds model, secondary transactions, and limited partners’ direct investing strategies.

The course is intended for students who are interested in working for a private equity firm, investing in private equity as limited partners, or providing investment banking or consulting services to private equity firms. This course is also appropriate for all students who are interested in a detailed and rigorous exploration of corporate finance, as many of the decisions taken by PE firms have a direct parallel to the decisions taken by companies more broadly.

Educational Objectives

This course has two objectives. First, it builds a rigorous approach for analyzing, negotiating and structuring investment opportunities. The second goal of the course is to provide students with a deep understanding of the private equity industry in a broad sense, its common tools, strategies, and factors that had been affecting its evolution. These elements are studied in a variety of contexts including buyout and growth equity funds of all sizes, and debt investing.

Course Content and Organization

The course has 28 sessions, followed by a final exam. Class participation and the final exam will each count for 40% of the course grade. A few cases will include exercises, which will count for 20% of the grade.

The course is organized into five modules.

• Module 1: Deal Sourcing and Valuation
  This module will explore various strategies employed by private equity firms to identify and evaluate investment opportunities. Important tools for evaluating investments-including LBO investment return models, financial statement analysis, and broader due diligence questions-will be examined.
• Module 2: Deal Execution
  This module highlights the critical levers utilized by private equity investors in structuring transactions. Capital structure, security choice, and broader capital markets issues will be central to the cases in this section. A detailed exploration of the structure and functioning of credit markets and their central role in private equity transactions will be highlighted.
• Module 3: Deal Management
  This module explores the important choices that private equity firms make after closure of the transactions. In particular, the critical operational levers that drive value creation will be examined, as well as governance and debt management.
• Module 4: Realizations
  This module examines timing of the exit and highlights the critical mechanisms for realizing value. A variety of realizations will be presented, including leveraged recapitalizations, strategic and financial sales of portfolio companies, initial public offerings, and secondary transactions.
• Module 5: Private Equity Firm Strategic and Management Issues
  This module takes a step back from deal-level analyses and looks at the organizational and strategic issues of private equity organizations. The goal is to understand why and which practices are likely to deliver sustained profitability in the future, and also to reflect on LPs pressures and needs.

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