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Regular version of the site
Master 2018/2019

Private Equity and Venture Capital

Type: Elective course (Financial Economics)
Area of studies: Economics
When: 1 year, 2 semester
Mode of studies: Full time
Master’s programme: Financial Economics
Language: English
ECTS credits: 3

Course Syllabus

Abstract

Private Equity and Venture Capital is a brief course for ICEF master’s students. It develops both theoretical and practical frameworks to comprehensive understanding of major principles of private equity and venture capital funds operations. The course is recommended for students thinking of career in PE&VC funds, investment banks, consulting and entrepreneurial fields or academic career in finance. The course covers the questions of PE and VC from the perspectives of investors, funds and potential portfolio companies. Prerequisites: Basic knowledge of accounting, financial statement analysis, corporate finance and investment analysis, basic skills in excel
Learning Objectives

Learning Objectives

  • The main objective of the course is to provide a conceptual background for PE and VC industry analysis.
  • The course is focused on developing skills in analyzing PE and VC performance, deal selection, valuation of PE investments, structuring PE transactions and further management of portfolio companies to enhance value creation, identifying suitable exit strategies.
  • We will also discuss the peculiarities of PE and VC investments in emerging capital markets and investigate the specifics of deals in different industries.
Expected Learning Outcomes

Expected Learning Outcomes

  • assess investment in private equity and compare it with that in public equity markets
  • apply the principles and methods of project selection and entry
  • be able to apply valuation methods used in PE industry
  • be able to compute contingent returns for different types of securities
  • evaluate policies PE managers employ to enhance value in portfolio companies
  • analyze factors affecting exit decisions and determinants of successful exits
Course Contents

Course Contents

  • Private Equity overview, PE fund organization, and performance
    a. Definition of private equity, role of PE in firm lifecycle b. PE investment cycle (entry – growth – exit). Typical activities performed by PE funds. c. Types of PE funds. Role of PE funds as intermediaries. Organizational structure of a PE fund (LP-GP agreements). Does the PE fund structure matter? d. Performance of PE funds. Does private equity outperform public market? Is it possible to predict performance in PE?
  • Selection of projects and entry strategies
    a. Industry analysis b. Screening process (deals origination, initial selection, due diligence) c. Types of entries (full buyout, growth capital, LBO, minority recapitalization, mezzanine, distressed situations) d. Syndication of investments
  • Valuation of PE and VC investments and fund returns
    a. Valuation techniques applicable for PE/VC industry (VC method, comparables, transactions, DCF, options analysis)
  • Structuring of PE deals
    a. Agency problems and deal structuring b. Private equity securities c. Legal system appropriate for PE contracting d. Russia specifics in deals structuring
  • Value enhancing management of portfolio companies
    a. goals and instruments of management b. monitoring and risk management c. corporate governance and value creation
  • Exiting PE investments and PR and VC performance
    a. Types of exists (IPO, trade sales to strategic/financial investor, MBO) b. Determinants of successful exit c. Role of PE/VC reputation in IPO success. Venture backed vs. non-venture backed IPOs
Assessment Elements

Assessment Elements

  • non-blocking Home assignment on modeling
  • non-blocking Cases (group work, 3 cases)
  • non-blocking Final Presentation
  • non-blocking Final exam
Interim Assessment

Interim Assessment

  • Interim assessment (2 semester)
    0.36 * Cases (group work, 3 cases) + 0.26 * Final exam + 0.26 * Final Presentation + 0.12 * Home assignment on modeling
Bibliography

Bibliography

Recommended Core Bibliography

  • Venture capital, private equity, and the financing of entrepreneurship : the power of active investing, Lerner J., Leamon A., 2012

Recommended Additional Bibliography

  • Corporate finance, Berk J., DeMarzo P., 2014