Private Equity Investments

A 3 day course on the process and techniques of financing a company’s growth using private equity. The course covers the entire company’s lifecycle from seed stage to maturity. What you will learn: When and how to use private equity to finance a company’s growth Valuation from the investor’s and owner’s perspectives The capital raising protocol Private equity funds’ features and investment process Due diligence and documentation Main characteristics of seed, growth and acquisition financing How to analyze and negotiate investors’ term sheets Advanced financing structures, valuation and negotiation Typical transaction structures in leveraged buyouts This course is intended for company executives involved in business development and acquisition work as well as entrepreneurs contemplating the financing of their growth strategy. It is also intended for finance professionals and advisors who wish to gain additional insights into the private equity investment process such as: Commercial bankers Investment bankers Management consultants CFOs & directors of finance Company and investment analysts Accountants Lawyers
Day 1 The Private Equity Landscape History Industry structure Investment trends Platform vs. add-on investments Transaction types Fund-level characteristics Return objectives by stage Strategic corporate investors Investment process Sources of funds Fund operations and objectives Valuation Fundamentals Intrincic Valuation DCF valuation Phases of growth Reality checks Comparative valuation Market-based valuation Valuation metrics Choosing comparables Contingent valuation Real options Monte Carlo Simulation Binomial tress The VC Method Seed Funding Fundamentals Main players Seed stage valuation Security instruments Pro-forma exit scenario analysis Dilution issues Investment tranches Case Studies (a) Valuation – Participants will calculate the pre-money valuation of Technora, Inc.(an early-stage software company, using DCF, market-based valuation techniques and the VC Method. (b) Funding Strategy – Participants will analyze the funding needs of Technora for the next 18 months and determine the price per share and the founders’ dilution given a requirement from investors regarding the establishment of an options pool for future hires. Day 2 Growth and acquisition financing VC investment activity Investments by stage Investments by series Median returns Venture Capital Selecting the right fund Typical VC fund profile VC returns The investment process Venture debt: types and uses Negotiating terms Understanding preferred stock Types of preferred stock Main features Antidilution provisions Liquidation preferences Capital Raising Protocol The business plan How investments are evaluated The management presentation Questions to ask Creating an auction The due diligence process Series A financing documents Analyzing a term sheet Main elements Price per share Pre- and post-money valuations Cap tables 10 most common clauses Focus of negotiations Investors’ tactics Case Studies (a) Due Diligence – Participants will analyze Technora’s from the point of view of a VC investor and develop questions required to conduct a proper due diligence (business model, operational, market, management team) on the company leading to an investment decision. (b) Deal Negotiation – Participants will form negotiating teams representing VC investors and founders. The teams will decide upon the value of the company based on previous analyses, negotiate a deal and agree on a Term Sheet outlining the basic structure of the deal. Day 3 Advanced Investment Structures The capital structure Mezzanine finance and subordinated debt Options, warrants and convertibles Valuation and negotiation Private placements Leveraged buyouts Candidate criteria Typical transaction structures Pros and cons Rationale Management buyouts Recapitalizations Case Studies (a) Leverage Buyout – Participants will analyze the acquisition of Technora by its senior management team using a combination of bank debt and mezzanine financing. From Seed to Series C – Participants will analyze the funding needs of Technora for the next five years (Series seed to C) and determine the price per share, dilution, options pools, shares to be issued for each round and establish what the investors’ interest will be worth upon a future exit along with their expected returns