Comprehensive course analysis
About the course
Private markets attract a considerable amount of attention and enthusiasm for their performance, diversification effects, and growth of assets under management. Among the different strategies, private equity capitalises on new technologies and trends (venture capital), fast growth companies (growth capital), repositioning of assets and strategic evolutions (leveraged buyouts). Private debt aims at providing investors a differentiated exposure to yield (senior/direct lending), possibly including capital gains (mezzanine debt) and to company restructuring (distressed debt, loan-to-own). Private real assets (private real estate, private infrastructure, timber, natural resources) offer different combinations of yield capital gains, inflation protection and downside protection. All these strategies share common traits, such as the use of equity and debt instruments, over a rather long duration, with active involvement of fund managers and negotiation of specific rights, usually to support high risk/high return projects.
This masterclass provides delegates with a comprehensive understanding of private markets. It will:
- Examine the role of private markets in an asset allocation, the instruments used and the challenges associated with their use
- Examine the dimensions of private markets investing and the tools that investors use
- Illustrate the portfolio construction process
- Analyse the economics of private markets funds, their fund raising process and their investor relations
- Analyse a representative LBO transaction from deal sourcing, to structuring, to execution, to exit
- Illustrate key due diligence issues
- Demonstrate how to structure and fund deals
- Examine valuation methods, and apply the most frequently used
- Demonstrate how to generate returns through value creation post-acquisition, use of tax and financial leverage, operational improvements, 100-day plans and other operational and strategic improvements
- Review exit scenarios such as trade sale, dividend recaps, IPOs, and write-offs
- Explore reporting of funds, and accounting frameworks
Attendees will see private markets from the standpoint of both:
- The buy-side (investors), i.e. capital providers to the asset class, looking to commit it according to specific risk-return-liquidity dimensions
- Fund managers (front office), i.e. intermediaries investing capital to acquire, grow and sell companies and assets
- Fund managers (middle and back office), i.e. Intermediaries fund raising, monitoring investments and reporting on it
- The sell-side (ecosystem), i.e. intermediaries assisting fund managers or interacting with them
The course will combine dynamically presentations, ateliers, business cases, role playing and interactive Q&A sessions. Active participation is encouraged, and practical exercises will be used.
Investing: Funds, funds-of-funds, mandates, co-investments
Setting a program, selecting funds and fund managers
- Choosing the right environment for selecting funds: from outsourcing to in-house operations
- Setting up the right program, depending on the constraints
- Selecting funds (and funds-of-funds): sourcing, approaching and accessing
- Specificities: persistence of return
- Challenges: adverse selection, contagion, lack of alignment of interests, conservatism, herding effects
- Competition between investors
- What managers look for in an investor?
- Request for proposals: virtues and limits
- Current debates: concentration of fund managers, conflicts of interests, generational change
- Current debates: fee level, hidden fees, hurdle rate,...
- Documentation: The private placement memorandum
- Documentation: The due diligence questionnaire (and the DD pack)
- Documentation: The Limited Partnership Agreement
Investing in private companies: sourcing, analysing, negotiating, creating value and exiting
- The investment process: five steps
- Choosing the tools: the case of the LBO
- Other types of investments
Analysing a deal: mid-market cleaning company
- Interactive business case (no preparation): deal analysis I
- Interactive business case: deal analysis II
- Negotiation and valuation
- Leverage effects
- Performance calculation and analysis
- Limits and risks
The deal and post-investment activities
- The closing and its legal documents
- 100-day plan, implementation, most frequent operations
- Value creation
- Exiting a deal: IPO, trade sale, secondary sale,...
Q&A and wrap-up
Cyril Demaria capitalizes on 18 years of experience in private equity investments (venture capital, funds selection), fundraising and structuring (start-up and funds), research and advisory. He combines practical and entrepreneurial experience, academic knowledge and lecturing experience. He is ...
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Because of COVID-19, many providers are cancelling or postponing in-person programs or providing online participation options.
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