Private Equity Mathematics

Cover
 Title
 Copyright
 Contents
 About the author
 Figures and tables
 Introduction
 Chapter overview
 Part I: Investing in Private equity
 1: Measuring private equity performance: a closer look
 The return multiple
 Internal rate of return (IRR)
 Well-known and less well-known IRR pitfalls
 Towards a solution: MIRR
 2: The private equity J-Curve: cash flow considerations from primary and secondary points of view
 Introduction
 The shape of the J-Curve
 Different models for forecasting private equity cash flows
 Optimise liquidity management through secondary investments. Shorter J-Curve with secondary investmentsConclusion
 3: Assessing the risk of private equity fund investments
 Introduction
 Difference between calculating risk in public and private markets
 Risk calculation based on time-series private equity valuations
 Risk calculation based on cross-section of private equity multiples
 Invested capital at risk (iCaR)
 Diversification reduces risk
 Mapping the risk of private equity
 Implementing opportunity costs
 Conclusion
 4: Benchmarking leveraged buyout transactions
 Introduction
 Mimicking public market investment
 'Can factory' --
an example. Conclusion5: Private equity performance benchmarking
 Traditional private equity performance benchmarking: measures and process
 Towards more advanced private equity performance benchmarks
 The fund selection efficiency of advanced private equity benchmarking techniques
 6: Estimating alpha in private equity
 Introduction
 Background
 Estimating portfolio statistics via comparables
 Development of the algorithm
 Conclusion
 7: Performance drivers in private equity investments*
 Detailed performance benchmark
 8: Private equity as part of your portfolio
 Introduction. Private equity tools (PETs)General partner perspective
 Fund of fund portfolio perspective
 Investor portfolio perspective
 Conclusion
 9: Assessing performance of private equity service providers
 A tale of two service providers
 Methods for evaluating performance
 Common pitfalls in assessing performance
 The cold reality
 Conclusion
 10: Fund of funds portfolio perspective
 Introduction
 Private equity fund of funds risk dimensions
 Theoretical portfolio construction approaches
 Private equity fund of funds portfolio construction --
worked example. Practical considerations in private equity fund of funds portfolio constructionConclusion
 Part II: Acquiring portfolio companies
 11: Investment valuations in private equity buyouts
 Introduction
 The buyout process
 Managing the investment
 Value creation
 Exiting the investment
 Conclusion
 12: Investment valuation from a venture capital perspective
 Introduction
 Objectives of venture capital
 Perceptions of risk
 Multiple tranches and milestone-based investing
 A new company is founded: first VC round to exit
 Exit valuations
 13: Compensation issues for management in an MBO.