Private Equity as an Asset Class (The Wiley Finance Series)

Private Equity as an Asset Class......Page 2
Contents......Page 10
Introduction......Page 16
Acknowledgements......Page 26
1: What is Private Equity?......Page 28
FUND INVESTING VERSUS DIRECT INVESTING......Page 29
TERMINOLOGY......Page 31
PRIMARY VERSUS SECONDARY FUND INVESTING......Page 33
A BROAD DELINEATION: BUYOUT AND VENTURE......Page 34
CAPITAL: ALLOCATED, COMMITTED, DRAWN DOWN AND INVESTED......Page 36
Structure......Page 38
Cashflow......Page 40
Investment......Page 42
Fundraising......Page 43
SUMMARY......Page 47
UNDERSTANDING THE J-CURVE AND COMPOUND RETURNS......Page 50
UPPER QUARTILE FIGURES......Page 56
MEDIAN RETURNS......Page 57
AVERAGE RETURNS......Page 58
MULTIPLES......Page 61
Distributed over Paid In (DPI)......Page 64
Total Value to Paid In (TVPI)......Page 65
VALUATION......Page 66
FEES......Page 67
TIME-WEIGHTED RETURNS......Page 68
SUMMARY......Page 69
MBO......Page 72
BIMBO......Page 73
Take Private......Page 74
OTHER “BUYOUT” ACTIVITY......Page 75
ESTABLISHED BUSINESSES......Page 77
DEBT......Page 79
EARNINGS......Page 81
SIZE......Page 82
CONTROL......Page 85
BARRIERS TO ENTRY......Page 88
SUMMARY......Page 91
4: How to Analyse Buyouts......Page 94
EARNINGS......Page 95
EBIT......Page 97
EBITDA......Page 98
EARNINGS GROWTH......Page 99
Multiple Increase in an Imperfect Market......Page 101
Multiple Increase in a Perfect Market......Page 104
LEVERAGE......Page 105
RECAPITALISATION......Page 106
TIMING......Page 107
MODELLING AND ANALYSING BUYOUT FUNDS......Page 109
SUMMARY......Page 114
US VERSUS EUROPEAN BUYOUT......Page 116
BUYOUT SKILL BASES......Page 118
IMPERFECT MARKETS......Page 119
EARNINGS MULTIPLES......Page 121
EARNINGS GROWTH......Page 124
LEVERAGE......Page 127
FUND SIZE......Page 128
WHAT CAN WE EXPECT FROM BUYOUT RETURNS IN FUTURE?......Page 134
RECENT FUNDRAISING LEVELS......Page 136
SOME CONCLUSIONS AND PREDICTIONS......Page 138
SUMMARY......Page 140
WHAT IS VENTURE CAPITAL?......Page 142
BACKING NEW APPLICATIONS, NOT NEW TECHNOLOGY......Page 143
IT......Page 145
Telecoms......Page 148
Life Science......Page 151
CLASSIFICATION BY STAGE......Page 155
Seed......Page 156
Seed Stage Focus......Page 158
“Value Add”......Page 160
Why European Venture Capital Firms have Avoided the Seed Stage......Page 161
SUMMARY......Page 162
Money Multiples......Page 164
Valuation......Page 167
Cost and Value......Page 174
IRRS AND MULTIPLES......Page 176
Going in Equity (GI%)......Page 177
THE IMPACT OF HOME RUNS......Page 178
SUMMARY......Page 182
US OUT-PERFORMANCE VERSUS EUROPE......Page 184
Money Multiples Drive IRRs......Page 186
Home Runs and the Golden Circle......Page 187
Market Conditions......Page 190
EUROPEAN VENTURE – IS IT AS BAD AS IT SEEMS?......Page 192
RETURNS AND FUND SIZE......Page 197
VENTURE RETURNS BY STAGE......Page 202
WHAT OF THE FUTURE?......Page 204
SUMMARY......Page 207
9: Due Diligence......Page 210
BUYOUT FUNDS......Page 213
VENTURE FUNDS......Page 215
CO-INVESTORS......Page 218
BUYOUT COMPANIES......Page 219
VENTURE COMPANIES......Page 221
FUND OF FUNDS......Page 223
MONITORING PRIVATE EQUITY FUNDS......Page 225
SUMMARY......Page 228
CASHFLOW PLANNING......Page 230
ALLOCATED, COMMITTED AND INVESTED CAPITAL......Page 232
DIVERSIFICATION BY TIME......Page 233
PROPER COMMITMENT LEVELS......Page 235
DIVERSIFICATION BY SECTOR AND GEOGRAPHY......Page 236
TOTAL RETURN......Page 240
HOW TO DEAL WITH UNINVESTED CAPITAL......Page 241
SECONDARIES......Page 243
PRIVATE EQUITY PROXIES......Page 246
TOWARDS A NEW WORLD OF PRIVATE EQUITY PROGRAMMES......Page 247
SUMMARY......Page 249
Glossary......Page 252
Index......Page 280