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Private Equity: History, Governance, and Operations, Second Edition

Book Description

An authoritative guide to understanding the world of private equity (PE) investing, governance structures, and operational assessments of PE portfolio companies

An essential text for any business/finance professional's library, Private Equity: History, Governance, and Operations, Second Edition begins by presenting historical information regarding the asset class. This information includes historical fundraising and investment levels, returns, correlation of returns to public market indices, and harvest trends. The text subsequently analyzes PE fund and portfolio company governance structures. It also presents ways to improve existing governance structures of these entities. A specific focus on portfolio company operations, including due diligence assessments, concludes the text.

  • Seamlessly blends historical information with practical guidance based on risk management and fundamental accounting techniques

  • Assists the book's professional audience in maximizing returns of their PE investments

  • Highly conducive to advanced, graduate-level classroom use

  • Purchase of the text includes access to a website of teaching materials for instructional use

Learn more about PE history, governance, and operations with the authoritative guidance found in Private Equity: History, Governance, and Operations, Second Edition.

Table of Contents

  1. Cover
  2. Series Page
  3. Title Page
  4. Copyright
  5. Preface
  6. Module I: The Private Equity Model and Historical Information
    1. Chapter 1: Introduction to Private Equity
      1. Introduction
      2. What Is Private Equity?
      3. General Terms and Brief Overview
      4. The Limited Partner Agreement and General Partner Incentives
      5. Private Equity Firm Structure and Selected Regulations
      6. Types of Private Equity Investment
      7. The Private Equity Fundraising Process
      8. Recent Fundraising Trends
      9. General Partner Investment Restrictions
      10. Conclusion
    2. Chapter 2: Overview of Historical Trends
      1. Introduction
      2. A Brief History of Private Equity
      3. Private Equity at the Turn of the Century
      4. Venture Capital Investment and Returns by Fund Stage
      5. Venture Capital and Buyout Returns by Fund Size
      6. Secondary Funds
      7. Conclusion
    3. Chapter 3: Trends in Private Equity
      1. Introduction
      2. A Changing Tide
      3. Overall Industry and Fundraising Trends
      4. Selected Regulatory Changes and Proposals
      5. Rise of Strategic Buyers
      6. Conclusion
    4. Chapter 4: Harvesting Private Equity Investments Through Initial Public Offering
      1. Initial Public Offerings
    5. Chapter 5: Legal Considerations in Initial Public Offerings
      1. Introduction
      2. Initial Public Offering
      3. The Sarbanes-Oxley Act and Dodd-Frank Act
      4. Conclusion
    6. Chapter 6: Harvesting Investments Through Mergers and Acquisitions
      1. Introduction
      2. M&A Basics
      3. Types of Takeovers
      4. Reverse Takeovers
      5. The Takeover Process and Financial Adviser Selection
      6. Analyzing Potential Buyers
      7. The Sale Process
      8. The Bidding Process
      9. Reaching an Agreement
      10. Historical M&A Trends
      11. Conclusion
    7. Chapter 7: Legal Considerations in Sale Transactions
      1. Introduction
      2. Sale Transactions
      3. Conclusion
    8. Chapter 8: Intellectual Property and Private Equity
      1. Introduction
      2. Intellectual Property Rights and Remedies
      3. Pre-Acquisition Due Diligence
      4. Creating Intellectual Property Value During Management
      5. Positioning the Exit—Reverse Due Diligence
  7. Module II: Governance Structures in Private Equity
    1. Chapter 9: The Private Equity Governance Model
      1. Introduction
      2. A New Model for Corporate Governance
      3. Conclusion
    2. Chapter 10: Value of Internal Control
      1. Introduction
      2. Introduction to COSO and Internal Control
      3. Components of Internal Control
      4. Control Objectives and Control Components
      5. Internal Control and the Private Equity Firm
      6. Conclusion
    3. Chapter 11: Internal Control Evaluation
      1. Introduction
      2. PCAOB Auditing Standard No. 5
      3. Phase 1: Planning the Audit
      4. Phase 2: Using a Top-Down Approach
      5. Phase 3: Testing Controls
      6. Phase 4: Evaluating Identified Deficiencies
      7. Phase 5: Wrapping Up
      8. Phase 6: Reporting on Internal Controls
      9. Conclusion
    4. Chapter 12: Financial Statement Fraud and the Investment Decision
      1. Introduction
      2. Money Laundering
      3. Categories of Fraud
      4. What Is Fraud?
      5. The Required Elements of Fraud
      6. Financial Statement Attestation
      7. Recommendations
      8. Fraud and Due Diligence Procedures
      9. Conclusion
    5. Chapter 13: Professional Standards
      1. Introduction
      2. Federal Trade Commission
      3. Securities and Exchange Commission
      4. “Private” Equity Going Public
      5. Public Company Accounting Oversight Board Standards
      6. American Institute of Certified Public Accountants Auditing Standards
      7. American Institute of Certified Public Accountants Accounting and Review Standards
      8. Institute of Internal Auditors Standards
      9. Information Systems Audit and Control Association
      10. Conclusion
  8. Module III: Understanding Operations
    1. Chapter 14: Contemporary Business and Competitive Intelligence
      1. Introduction
      2. Contemporary Business Intelligence
      3. Competitive Intelligence and the External Environment
      4. Normalizing Performance
      5. Cost of Capital and the Option to Invest
      6. Developing Unique Intelligence
      7. An Economic View of Quality
      8. Developing Relationships and Navigating Crises
      9. Application to Private Equity
      10. Conclusion
    2. Chapter 15: Organizations as Humans
      1. Introduction
      2. Purpose of the Organization
      3. Genesis
      4. Development and Specialization
      5. Parts of the Whole and Maturation
      6. Environmental Adaptation
      7. Environmental Influence and Interaction
      8. Maturity Creates “The Machine”
      9. Death of the Organization and Rebirth
      10. Strengths and Weaknesses of the Organizations as Humans Metaphor
      11. Conclusion
    3. Chapter 16: Beginning the Lean Transformation
      1. Introduction
      2. Conclusion
    4. Chapter 17: Performing Manufacturing Due Diligence Assessments
      1. Introduction
      2. Performing the Assessment
      3. Operational Data and Cost of Sales
      4. Conclusion
  9. About the Authors
  10. Glossary
  11. Index