CPD course outline: introduction to private equity MBOs (management buy outs) and LBOs (leveraged buy outs) – one day

• Background – private equity
  • Where do private equity firms get their money from?
  • Investment time frames and hurdles
  • How are investors rewarded?
  • How is success measured?
  • De-mystifying jargon

Exercise – the power of leverage.   Delegates look at how private equity firms measure returns and consider the exact impact when leverage increases just slightly.

• Structuring a private equity buy out
  • Senior debt
  • Mezzanine finance
  • Institutional equity
  • Vendor notes
  • Management equity

Exercise – sources and uses.  Delegates build up a deal structure (sources and uses) for a real deal.

• Pricing a private equity buy out
  • Valuation of target company
  • Debt considerations
  • Use of P/E ratios
  • Private equity’s IRR

Exercise – valuation case study.  Delegates look at a case study.  How much might management be able to pay for this business?

• Achieving a successful private equity buy-out
  • Determining debt capacity
  • Negotiating equity stakes – management’s “Envy Ratio”
  • Key criteria for success
  • Due diligence considerations

Exercise – structuring equity.  Delegates look more closely at their case study.   What equity stake might it seem reasonable for management to demand?

• Legal considerations
  • Key documents
  • Acquisition of the target
  • Key protections for private equity
  • What if the business struggles?
  • How is the decision made to exit?
  • What if a key manager leaves?
  • When is a minority stake not a minority stake?
  • Debt facilities

• Achieving exit
  • Trade sale vs. flotation
  • Secondary buy-outs vs. recapitalisation

Case study – exits.  Delegates look at a real private equity deal.  What are the exit options for this business?   What would they recommend if they were the private equity board member?  In real-life, what actually happened?

• Course conclusion
  • How private equity buy outs work
  • How deals are structured
  • Risks and rewards to different parties
  • What investors are looking for and how they can best get it

Book this private equity course

The private equity course is next running April 2012. To book on the program please click on the red "book course" button below.

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