Module name Private Equity Investment

Module code SMM528

School Bayes Business School
Department or equivalent Specialist Masters Programme
UK credits 10
ECTS 5
Level 7

MODULE SUMMARY

Module outline and aims

The objective of this course module is to provide you with a broad appreciation of private
equity. It is not intended to prepare you for becoming a practitioner in the private equity
sector or to teach detailed technical aspects of private equity practice (eg, performing
due diligence). However, it will provide a useful introduction for those of you with future
career interests in the private equity sector and has proved helpful to those seeking
employment in the private equity industry.

Content outline

• Overview of Global Private Equity

• Introduction to Venture Capital
• Introduction to Buyouts
• The Private Equity Investment Lifecycle
• Valuing and Structuring Venture Capital Deals
• Valuing Buyout Deals – The Adjusted Present Value Method
• Class Case Discussion - Centex Telemanagement, Inc
• Modelling and Structuring Buyout deals
• Class Case Discussion – Berkshire Partners: Bidding for Carters
• How Private Equity Funds Work
• Drivers of Private Equity Fund Returns
• Measuring And Benchmarking Private Equity Fund Performance
• Class Case Discussion – Chips On The Side (A): The Buyout of Avago Technologies
• Private Equity As An Asset Class
• Role Of Private Equity In The Modern Diversified Multiple-Asset-Class Investment
Portfolio
• Some Practical Private Equity Investment Considerations
• Class Case Discussion – Yale University Investments Office: February 2011
WHAT WILL I BE EXPECTED TO ACHIEVE?

On successful completion of this module, you will be expected to be able to:

Knowledge and Understanding

• Understand how private equity has evolved over time, its global structure and
importance
• Appreciate the distinctive characteristics of the two primary forms of private equity –
Venture Capital and Buyouts – the role they play in the economy, their investment
economics, returns, risks, skill requirements, and similarities and differences
• Understand the key phases and disciplines of the private equity investment life-
cycle, as well as the time scale for investing and realising value from private equity
investments
• Know how private equity funds work and understand their economics
• Appreciate the role played by private equity in the overall investment portfolio, the
distinctive characteristics of private equity as an important asset class, and the
practical considerations important to institutional investors when investing in private
equity funds

Skills

• Understand how prospective private equity deals are sourced and what framework
to use for evaluating and negotiating deals
• Know the techniques for modelling and valuing private equity deals.
• Understand what your job would be as a private equity fund manager and how you
would interact with portfolio company entrepreneurs in adding value to their
investments
• Appreciate what investment returns to expect and how returns are measured and
benchmarked

Values and attitudes

• Understand the conflicting incentives and pressures amongst entrepreneurs, fund

managers, and institutional investors and the critical need for judgement and
balance to be applied, as well as the potential for financial and ethical conflicts of
interest to arise
• Appreciate the long-term perspective required for successful private equity
investment and how fair-minded, ethical behaviour supports good performance
• Recognise the necessity and importance of making business decisions when
available information is incomplete and imperfect
HOW WILL I LEARN?

The course is practically oriented and aimed at providing a real-world understanding of

the private equity investment process. Lectures concentrate on providing an overall
framework for understanding private equity, as well as teaching specific concepts and
technical skills important to private equity, such as company valuation techniques and
modelling. The technical content of lectures is reinforced by problem sets assigned as
homework with the correct solutions presented and discussed in class. A practical
understanding of evaluating, valuing, and negotiating deals is gained through the
analysis and class-room discussion of case studies based on actual situations, as well
as interaction with guest lecturers from the private equity sector. The problem sets are
linked to the case studies.

Lectures. Lecture notes are provided to assist you in preparing for lectures. However,
additional information will be discussed and provided during lectures, most particularly
the solutions to problem sets and information associated with the class discussion of
cases.
Pre-Class Readings. There is no single book that covers the course content adequately.
Therefore, pre-class readings will be made available to assist your learning. These
readings, together with the class notes, problem sets/solutions, and lecture presentation
slides, should allow you to master the course content.
Case Studies. Preparation of case studies and participation in class discussion of the
cases is an important part of the learning process. In addition to providing a real-world
picture of how private equity works in practise, the case studies will give you an
opportunity to integrate and employ knowledge gained in previous MSc courses.
Students will be called upon to provide their analysis of and solutions for the case orally
in class. You will be encouraged to discuss the cases before class in groups in order to
profit from the experience and insights of others.
Problem Sets. Problem sets will be assigned before class sessions and will be an
essential input to the discussion of cases, as they will provide important inputs to the
discussion of cases in class. Problem set solutions will be discussed during the class
when there will be ample opportunity to ask questions to ensure you understand how to
solve the problems.
Guest Lecturers. Guest Lecturers - all leading practitioners in the field - will participate in
most class-sessions and will provide an important input to your learning. They will
present aspects of private equity not covered elsewhere in the course and will provide
you with an opportunity to interact in Q&A sessions. As an example, past Guest
Lecturers have included:

• Mr Richard Anton – General Partner, Amadeus Capital Partners Chairman,

British Private Equity & Venture Capital Association
• Guest Lecturer: Mr Kurt Bjorklund – Co-Managing Partner, Permira Advisers
• Mr Tim Bunting – General Partner, Balderton Capital
• Mr Tim Church, President, McKinsey Investment Office
• Mr Simon Clark - Managing Partner, Fidelity Growth Partners; Chairman, British
Private Equity & Venture Capital Association
• Mr Robert Coke –Head of Buyouts and Absolute Return, Wellcome Trust
• Mr William Cornog –Global Head, KKR Capstone
• Mr Louis Elson, Co-Founder & Managing Partner, Palamon Capital Partners
 • Mr Nicholas Ferguson – Founder & Chairman, SVG Capital; former Founder &
Chairman, Schroder Ventures/Permira
• Ms Tilly Franklin – Head of Private Equity Investments, Alta Advisers Ltd
• Mr Nigel Grierson, Founder & Co-Managing Director, Doughty Hanson
Technology Ventures
• Mr Jon Moulton - Founder and Chairman, Better Capital
• Mr Juan de Ochoa – Head of Europe, KKR Capstone
• Mr Jan Petzel - Executive Director, Goldman Sachs Capital Partners
• Ms Erin Smith – Global Head of Business Development, Misys plc
• Mr Robert Wallace – CEO, Alta Advisers Ltd, former Director, Yale University
Investments Office

Teaching pattern

Teaching Teaching Contact Self-directed Placement Total

component type hours study hours hours student
(scheduled) (independent) learning
hours
Lecture Lecture 18 82 0 100

Totals: 18 82 0 100

WHAT TYPES OF ASSESSMENT AND FEEDBACK CAN I EXPECT?

Assessments

This module will be assessed by 100% coursework comprising a final invigilated test
(75%) and coursework (25%).

Further details about what is expected of you in class will be made available by the
module leader at the beginning of the course.

Assessment pattern:

Assessment Assessment Weighting Minimum Pass/Fail?

component type qualifying
mark
Invigilated test Set exercise 75% N/A N/A

Coursework Set exercise 25% N/A N/A

Assessment criteria:
Standard MSc grade related assessment criteria will apply.

Assessment criteria are descriptions of the skills, knowledge or attributes you need to
demonstrate in order to complete an assessment successfully. Grade related criteria are
descriptions of the skills, knowledge or attributes you need to demonstrate to achieve a
certain grade or mark in an assessment. Assessment criteria and grade related criteria
for module assessments will be made available to you prior to an assessment taking
place. More information will be available from the module leader.

Feedback on assessment

Following assessment, you will be given your marks and feedback in line with the
Assessment Regulations and Policy. More information on the timing and type of
feedback that will be provided for each assessment will be available from the module
leader.

Assessment Regulations

The pass mark for the module is 50%. Any minimum qualifying marks for specific
assessments are listed in the table above. The Programme Specification contains
information on what happens if you fail an assessment component or the module.

Assessment Regulations and Policy:

https://www.city.ac.uk/about/city-information/governance/constitution/senate-regulations

https://www.city.ac.uk/__data/assets/pdf_file/0008/68921/assessment_and_feedback_p
olicy.pdf
INDICATIVE READING LIST

Kocis, J. Bachman, J. Long, A. Nichols, C. (2009) Inside Private Equity (Wiley)

Talmor, E. Vasvari, F. (2011) International Private Equity ri (Wiley)
Koller, T. Goedhart, M. Wessels, D. (2010) Valuation: Measuring and Managing The
Value of Companies ( Wiley)
Povaly, S. (2007) Private Equity Exits (Springer)
Fraser-Sampson, G. (2010) Private Equity as an Asset Class (Wiley)
Swensen, D.F. (2000) Pioneering Portfolio Management: An Unconventional Approach
to Institutional Investment (Free Press)
Cohen, R (2008) The Second Bounce of The Ball (W&N)
Swensen, DF. (2005) Unconventional Success: A Fundamental Approach to Personal
Investment (, Simon & Schuster)
Lerner, J. Leamon, A. Hardymon, F. (2012) Venture Capital, Private Equity, and the
Financing of Entrepreneurship
(Wiley)
Demaria, C. (2013) Introduction to Private Equity (Wiley)

Version: 6.1
Version date: October 2021
For use from: 2021-22

Appendix: see http://www.hesa.ac.uk/content/view/1805/296/ for the full list of JACS

codes and descriptions

CODES

HESA Code Description Price Group

133 Business and D
Management Studies

JACS Code Description Percentage (%)

N320 The study of the 100
investment and insurance
industries and the
techniques used therein.

HeCoS Code Description Percentage (%)

100078 Business and 100
Management