Private Equity Masterclass: M3 - Mezzanine Private Equity & Growth Equity

This comprehensive training course will: Examine the role of traditional PE, real assets and infrastructure PE, private mezzanine financing (PMF), and growth equity in the portfolio Analyse representative transactions and assess the attractiveness of potential transactions in different transaction contexts Illustrate common types and identify classic sources of traditional PE, real assets, infrastructure, PMF and growth equity transactions Examine entry valuation methodologies, including forecasting and modelling Demonstrate how to structure and fund deals Demonstrate how to generate returns through opportunistic entry, improved fundamental performance post-acquisition, use of leverage and performance incentives, and timely exit Profile sources of financing for transactions of different asset classes Examine funds flows and asset ownership changes associated with different products Demonstrate classic post-acquisition operational improvements, such as more disciplined capital spending, reductions in working capital, and performance-related compensation Profile key due diligence issues, including HR due diligence Review exist alternatives, including leveraged recaps, IPOs, and trade sales to a strategic buyers View our 60 Second Interview with the Course Director - Andrew Regan We took the opportunity to ask our expert Course Director a few questions on the current market challenges and how he became involved in this exciting industry. This is what he had to say. Course Summary Alternative assets (AA) have attracted in recent years a considerable amount of attention and enthusiasm for their performance, diversification effects, and growth of assets under management (AUM). Among various alternative asset classes, traditional leveraged private equity and mezzanine finance share numerous characteristics – illiquidity, longterm horizons, and potential for high levels of returns. Infrastructure private equity and real asset investment add diversification plus inflation protection. All these areas can utilise leverage in acquiring the underlying assets. This is Module 3 of the Private Equity Masterclass Private Equity Masterclass (Modular Course) M1: Traditional Private Equity: Leveraged Transactions M2: Real Assets Infrastructure Private Equity Who Should Attend? Private equity professionals Venture capitalists Institutional and family office investors Investment bankers Private wealth and other investment managers Corporate strategic planning and development staff Corporate financiers Corporate M&A teams Placement specialists Accountants Lawyers This masterclass provides delegates with a comprehensive understanding of these "illiquid" alternative asset classes, it will: Examine the role of traditional PE, real assets and infrastructure PE, private mezzanine financing (PMF), and growth equity in the portfolio Analyse representative transactions and assess the attractiveness of potential transactions in different transaction contexts Illustrate common types and identify classic sources of traditional PE, real assets, infrastructure, PMF and growth equity transactions Examine entry valuation methodologies, including forecasting and modelling Demonstrate how to structure and fund deals Demonstrate how to generate returns through opportunistic entry, improved fundamental performance post-acquisition, use of leverage and performance incentives, and timely exit Profile sources of financing for transactions of different asset classes Examine funds flows and asset ownership changes associated with different products Demonstrate classic post-acquisition operational improvements, such as more disciplined capital spending, reductions in working capital, and performance-related compensation Profile key due diligence issues, including HR due diligence Review exist alternatives, including leveraged recaps, IPOs, and trade sales to a strategic buyers Attendees will see private equity from the standpoint of both: The buy-side, i.e. investors with capital looking to commit it to uncorrelated, historically higher-return, but illiquid investments The sell-side, i.e. intermediaries assisting in the structuring and financing of private equity transactions Methodology The course will include the analysis of several private equity deals and leveraged buyouts, including a series of Asian transactions. A Socratic approach, with active participation and exercises, will be used. Computer-Based Exercises All delegates should bring a laptop loaded with Microsoft Excel 2003 or later to facilitate in-class studies and exercises. FTS-Eligible This programme is approved for listing on the Financial Training Scheme (FTS) Programme Directory and is eligible for FTS claims subject to all eligibility criteria being met. Please note that in no way does this represent an endorsement of the quality of the training provider and programme. Participants are advised to assess the suitability of the programme and its relevance to participants’ business activities or job roles. The FTS is available to eligible entities, at a 50% funding level of programme fees subject to all eligibility criteria being met. FTS claims may only be made for programmes listed on the FTS Programme Directory with the specified validity period. Please refer to www.ibf.org.sg for more information. Please note that this course is only eligible for FTS Funding when registering for all modules.
Module Three Mezzanine Private Equity and Growth Equity Day 4 Role in the portfolio, deal sourcing Role of private mezzanine finance (PMF) and growth equity PMF strategy types LBOs and MBOs Roll-ups Disposals, divestitures, and equity "carve-outs" PIK, equity-linked, and coupon instruments Growth equity as distinguished from traditional leveraged private equity and venture capital Growth equity strategy types Growth equity: Minority stakes in private/public companies with some "problem" "Strategic" Investors: Minority stakes in private/public companies which can benefit from strategic guidance Pre-IPO and "cornerstone" investors Turnaround situations: Minority stakes in private/public firms Fundamental analysis in growth equity Topline growth Profitability Cash use/generation Projected sources of post-acquisition value-added Improved fundamental performance via more disciplined capital investment, better working capital management, and more focused product/market development Improved management incentives and governance PMF sources of returns/manager value added Timely entry Financial: Modest use of leverage - really an equity solution Operational: Post-closure performance improvement Strategic: Transformative strategic, operational, managerial, and financial input by a very sophisticated investor Timely exit Growth equity sources of returns/manager value-added Timely entry Financial: Disciplined capital investment and cashflow management, but without compromising the exploitation of exciting growth prospects to the fullest, and without additional leverage Operational: Post-closure performance improvement Strategic: Exploitation of organic growth and growth to critical mass in a consolidating sector Timely exit Case studies: GOME: Strategic partnership with Warburg Pincus DLJ Merchant Banking Partners Stake in Hard Rock Hotels Day 5 Transaction structure and funding Transaction structure Sources and uses of funds Capital structure Projected method and timing of exit Projected IRR Valuation in PMF Entry: Comparable firm multiples and control premiums Exit valuations: Comparable firm multiples Application of traditional convertible options-based approaches Valuation in growth equity Entry: DCF analysis, comparable transactions, peer firm multiples adjusted to reflect control premiums Exit Valuations: Comparable transaction and peer firm multiples Due diligence Commercial due diligence Management due diligence Operational due diligence Financial/Accounting due diligence Legal due diligence IT due diligence HR due diligence Sources of financing Private convertible preferred stock and convertible bonds Exit strategies: “Harvesting” returns Strategic buyers: More common in "growth" equity and mezzanine Financial buyers: Another alternative Public market exit: Attractiveness of "growth" assets in the IPO market Leveraged recapitalisation: Avoiding debt burdens on "growth" assets No exit: "Buy-and-hold" for future dividend distributions PMF/Growth equity managers: Organisational structures and associated funds flows General vs. Limited partners Legal: Specified life, withdrawal prohibitions, transfer restrictions, liability Capital flows: "Takedown" schedules, capital calls, "cashflow waterfalls" and distributions Manager fees and compensation: management fees, "transaction" fees, and carried interest Case studies: Growth private equity: TPG Texas Pacific, General Atlantic Partners, and Newbridge Capital Investment in Lenovo MBK Partners: Turnaround investment in Japanese jeweler Takeshi Shinju Goldman Sachs Stakes in Korean financial institutions