Mastering Private Equity: Transformation via Venture Capital, Minority Investments and Buyouts

THE DEFINITIVE GUIDE TO PRIVATE EQUITY

Mastering Private Equity was written with a professional audience in mind and provides a valuable and unique reference for investors, finance professionals, students and business owners looking to engage with private equity firms or invest in private equity funds. From deal sourcing to exit, LBOs to responsible investing, operational value creation to risk management, the book systematically distills the essence of private equity into core concepts throughout the private equity life cycle.

This book combines insights from leading academics and practitioners and was carefully structured to offer:

A clear and concise reference for the industry expert A step–by–step guide for students and casual observers of the industry A theoretical companion to the INSEAD case book Private Equity in Action: Case Studies from Developed and Emerging Markets

PRAISE FOR MASTERING PRIVATE EQUITY

"Mastering Private Equity teaches the fundamentals and best practices of PE investing and ensures a deeper understanding of the PE dynamics for professionals from various backgrounds. It shows the potential the asset class has for building better and stronger companies and thereby acting as a force for good for the economy overall."
Professor Ilian Mihov,
Dean of INSEAD

"This is a powerful book, clear on the fundamentals and rich on insight. It accurately describes how private equity works it also provides nuance on how private equity really works."
Alan MacKay,
Managing Partner GHO Capital and current Chairman of the British Venture Capital Association

"Mastering Private Equity pulls back the shroud of mystery surrounding private equity a succinct yet comprehensive source of information for the expert reader."
Jim Leech C.M.
Chancellor, Queen′s University and former CEO, Ontario Teachers′ Pension Plan

FEATURING GUEST COMMENTS BY SENIOR PE PROFESSIONALS FROM:

Abraaj Adams Street Partners Apax Partners Baring PE Asia Bridgepoint The Carlyle Group Coller Capital Debevoise & Plimpton LLP FMO Foundry Group Freshfields Bruckhaus Deringer General Atlantic ILPA Intermediate Capital Group KKR Capstone LPEQ Maxeda Navis Capital Northleaf Capital Oaktree Capital Partners Group Permira Terra Firma

List of Contributors vii

Foreword by Henry R. Kravis, Co–Chairman and Co–CEO of KKR ix

Preface xiii

How to Use This Book xvii

Section I Private Equity Overview 1

Chapter 1 Private Equity Essentials 5

Chapter 2 Venture Capital 19

Chapter 3 Growth Equity 33

Chapter 4 Buyouts 43

Chapter 5 Alternative Strategies 57

Section II Doing Deals in PE 69

Chapter 6 Deal Sourcing & Due Diligence 73

Chapter 7 Target Valuation 87

Chapter 8 Deal Pricing Dynamics 97

Chapter 9 Deal Structuring 109

Chapter 10 Transaction Documentation 121

Section III Managing PE Investments 133

Chapter 11 Corporate Governance 137

Chapter 12 Securing Management Teams 149

Chapter 13 Operational Value Creation 161

Chapter 14 Responsible Investment 173

Chapter 15 Exit 185

Section IV Fund Management and the GP LP Relationship 197

Chapter 16 Fund Formation 201

Chapter 17 Fundraising 215

Chapter 18 LP Portfolio Management 227

Chapter 19 Performance Reporting 241

Chapter 20 Winding Down a Fund 253

Section V The Evolution of PE 263

Chapter 21 LP Direct Investment 267

Chapter 22 Listed Private Equity 279

Chapter 23 Risk Management 289

Chapter 24 Private Equity Secondaries 301

Chapter 25 Evolution of Private Equity 313

Acknowledgments 325

About the Authors 327

Glossary 329

Index 341