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• Case | HBS Case Collection | 2013 (Revised from original 2012 version)

  TerraPower

  William A. Sahlman, Ramana Nanda, Joseph B. Lassiter III and James McQuade

  John Gilleland, CEO of TerraPower, returned to his office after a lengthy meeting with potential investors. It was October 2012, and TerraPower was in the process of raising a $200M Series C round to finance the ongoing development of its next-generation nuclear reactor. Though early in the fundraising process, Gilleland noted that this most recent conversation was similar to conversations with other interested cleantech growth equity investors. The conversations circled around a common theme: "This is the biggest idea that's ever been presented at our partners' meeting. We love what you're doing, but it's not right for us as an investment." Outside of raising money from typical growth equity and infrastructure funds, Gilleland could partner with a government and/or form a joint venture with an existing nuclear power player. Reliance Industries as an investor in TerraPower could provide an entry point into the fast growing Indian market. At the same time, Gilleland and Gates had talked with China National Nuclear Corp. about a possible cooperation with TerraPower. Whom should Gilleland call next?

  Keywords: nuclear power; entrepreneurial finance; venture capital; Financing and Loans; Energy Industry; United States; China; India;

  Citation:

  Sahlman, William A., Ramana Nanda, Joseph B. Lassiter III, and James McQuade. "TerraPower." Harvard Business School Case 813-108, April 2013. (Revised from original November 2012 version.)

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• Background Note | HBS Case Collection | 2013 (Revised from original 1987 version)

  Note on Free Cash Flow Valuation Models

  William A. Sahlman

  Explores some of the issues involved in valuing cash flow streams. A simple model is presented that reveals the effect on value of changing assumptions about the appropriate discount rate, the level of profitability, the growth rate of sales, the asset intensity ratio, and the leverage ratio. Helps students address some of the following issues: 1) What is the definition of cash flow? 2) What effects do changes in the discount rate have on valuation? 3) How sensitive is value to changes in assumptions about the underlying characteristics of the cash flow stream? 4) How does growth affect value? 5) How does the use of leverage affect value? 6) What are price-to-earnings ratios? and 7) What factors affect price-to-earnings ratios?

  Keywords: Cash Flow; Valuation;

  Citation:

  Sahlman, William A. "Note on Free Cash Flow Valuation Models." Harvard Business School Background Note 288-023, January 2013. (Revised from original October 1987 version.)

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• Technical Note | HBS Case Collection | 2012

  Early Career LBOs Using the Search Fund Model

  Howard Stevenson, Michael Roberts and Jim Sharpe

  The funded search model is one alternative for individuals who, at some point in their career, want to run their own companies. This note looks at the funded search, as a means to entrepreneurship through acquision and describes the path to buy and run a business using debt and equity as a means of financing the purchase. While applicable to an early career choice, many of the process steps are applicable to unfunded searches at later stages of a career.

  Keywords: Search Funds; search; leveraged buyouts; entrepreneurial finance; investor behavior; career planning; entrepreneurial management; fundraising; negotiation; Entrepreneurship; Capital Structure; Borrowing and Debt; Personal Development and Career; Private Ownership; Acquisition; Finance; Leveraged Buyouts;

  Citation:

  Stevenson, Howard, Michael Roberts, and Jim Sharpe. "Early Career LBOs Using the Search Fund Model." Harvard Business School Technical Note 813-119, December 2012.

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