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Introduction to Private Equity: Venture, Growth, LBO and Turn-Around Capital, 2nd Edition

Book Description

This second edition of Introduction to Private Equity is more than an update, it reflects the dramatic changes which have affected an industry which is evolving rapidly, internationalizing and maturing fast. What is recognized as a critical yet grounded guide to the private equity industry blends academic rigour with practical experience. It provides a clear, synthetic and critical perspective of the industry from a professional who has worked at many levels within the industry; including insurance, funds of funds, funds and portfolio companies.

The book approaches the private equity sector top-down, to provide a sense of its evolution and how the current situation has been built. It then details the interrelations between investors, funds, fund managers and entrepreneurs. At this point, the perspective shifts to bottom-up, how a private business is valued, how transactions are processed and the due diligence issues to consider before moving ahead.

Introduction to Private Equity, Second Edition covers the private equity industry as a whole, putting its recent developments (such as secondary markets, crowdfunding, venture capital in emerging markets) into perspective. The book covers its organization, governance and function, then details the various segments within the industry, including Leveraged Buy-Outs, Venture Capital, Mezzanine Financing, Growth Capital, Distressed Debt, Turn-Around Capital, Funds of Funds and beyond. Finally, it offers a framework to anticipate and understand its future developments.

This book provides a balanced perspective on the corporate governance challenges affecting the industry and draws perspectives on the evolution of the sector, following a major crisis.

Table of Contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Dedication
  6. Foreword to the Second Edition
  7. Acknowledgements
  8. About the Author
  9. Introduction
    1. 0.1 A MOVING TARGET
    2. 0.2 A CONSUBSTANTIAL LACK OF INFORMATION
    3. 0.3 BENIGN NEGLECT, MALIGN CONSEQUENCES
    4. 0.4 KNOWING THE DEVIL TO CIRCUMVENT IT
    5. REFERENCES
  10. Part I: What is Private Equity?
    1. Chapter 1: Private Equity as an Economic Driver
      1. 1.1 POOLING INTERESTS TO IDENTIFY AND EXPLOIT SOURCES OF WEALTH
      2. 1.2 CHAMPIONING ENTREPRENEURSHIP
      3. 1.3 CONCLUSION: AN ATTEMPT AT DEFINITION
      4. REFERENCES
    2. Chapter 2: Modern Private Equity – A French Invention?
      1. 2.1 USA: THE FOUNDRY OF MODERN PRIVATE EQUITY
      2. 2.2 EUROPE: ADAPTING A SUCCESSFUL MODEL OR CREATING ITS OWN?
      3. 2.3 CONCLUSION: EMERGING MARKETS, BUILDING CASTLES ON SAND?
      4. REFERENCES
  11. Part II: The Private Equity Ecosystem
    1. Chapter 3: Private Equity
      1. 3.1 WE ARE ALL INVESTORS IN PRIVATE EQUITY
      2. 3.2 ORGANISATION AND GOVERNANCE OF PRIVATE EQUITY FUNDS
      3. 3.3 MEASURING PERFORMANCE, MANAGING RISKS AND OPTIMISING RETURNS
      4. 3.4 PITFALLS AND CHALLENGES
      5. 3.5 CONCLUSION
      6. REFERENCES
    2. Chapter 4: The Universe of Investment
      1. 4.1 VENTURE CAPITAL: FINANCING COMPANY CREATION
      2. 4.2 GROWTH CAPITAL: FINANCING COMPANIES' EXPANSION
      3. 4.3 LEVERAGED BUY-OUT: FINANCING COMPANIES' TRANSMISSIONS
      4. 4.4 OTHER INTERVENTIONS IN PRIVATE EQUITY
      5. 4.5 CONCLUSION
      6. REFERENCES
    3. Chapter 5: The Process of Investment
      1. 5.1 STEP 1: PRELIMINARY ANALYSIS
      2. 5.2 STEP 2: VALUATION
      3. 5.3 STEP 3: NEGOTIATING
      4. 5.4 STEP 4: STRUCTURING
      5. 5.5 STEP 5: COMPLEMENTARY DUE DILIGENCE
      6. 5.6 STEP 6: TRANSACTION
      7. 5.7 STEP 7: MONITORING AND EXIT
      8. 5.8 CONCLUSION
      9. REFERENCES
  12. Part III: Private Equity in Teenage Time
    1. Chapter 6: Private Equity Evolution
      1. 6.1 IS PRIVATE EQUITY GOING MAINSTREAM?
      2. 6.2 IS PRIVATE EQUITY (STILL) CREATING VALUE?
      3. 6.3 PRIVATE EQUITY: BETWEEN BUBBLES AND CRASHES
      4. 6.4 CONCLUSION
      5. REFERENCES
    2. Chapter 7: Private Equity and Ethics
      1. 7.1 GREED
      2. 7.2 DESTRUCTION
      3. 7.3 PHILANTHROPY
      4. 7.4 TRANSPARENCY
      5. 7.5 SELF-REGULATION OR IMPOSED REGULATION?
      6. 7.6 CONCLUSION
      7. REFERENCES
    3. Chapter 8: General Conclusion – Private Equity Today and Tomorrow
      1. 8.1 FEWER GENERAL PARTNERS, BUT NOT NECESSARILY BETTER ONES
      2. 8.2 CORE TARGET: MANAGE THE VOLATILITY OF PERFORMANCE
      3. 8.3 THE ONLY VALID LEITMOTIV: LONG-TERM THINKING
      4. 8.4 THE IMPACT OF FAIR MARKET VALUE
      5. 8.5 A LONG-TERM TREND: THE ATTRACTIVENESS OF PRIVATE EQUITY
      6. 8.6 PRIVATE EQUITY: FUTURE VICTIM OF ITS OWN SUCCESS?
      7. 8.7 THE IMPACT OF A BETTER KNOWLEDGE OF PRIVATE EQUITY
  13. Template 1 (Fund)
    1. ARCHITECTURE OF THE PRIVATE PLACEMENT MEMORANDUM OF A PRIVATE EQUITY FUND
  14. Template 2 (Fund)
    1. STRUCTURE OF A LIMITED PARTNERSHIP AGREEMENT
  15. Template 3 (Fund)
    1. DUE DILIGENCE CHECKLIST
  16. Template 4 (Fund)
    1. QUARTERLY REPORT TEMPLATE
  17. Template 5 (Company)
    1. NON-DISCLOSURE AGREEMENT
  18. Template 6 (Company)
    1. BUSINESS PLAN
  19. Template 7 (Company)
    1. TERM-SHEET
  20. Business Case
    1. THE BRAZILIAN EDUCATION MARKET
    2. CURRENT SITUATION IN BRAZIL
    3. COMPETITION OF KROTON EDUCACIONAL SA
    4. KROTON EDUCACIONAL SA
    5. ADVENT INTERNATIONAL: A PRIVATE EQUITY PIONEER
    6. THE TRANSACTION
    7. QUESTIONS SUPPORTING THE CASE RESOLUTION
  21. Exhibits
  22. Glossary
    1. A
    2. B
    3. C
    4. D
    5. E
    6. F
    7. G
    8. H
    9. I
    10. J
    11. K
    12. L
    13. M
    14. N
    15. O
    16. P
    17. Q
    18. R
    19. S
    20. T
    21. V
    22. W
  23. Bibliography
  24. Index