PRIVATE EQUITY AND DEVELOPMENT FUNDING

The aim of the course, which is part of the courses characterizing the Entrepreneurship curriculum of the Master in Global Development and Enterpreneurship, is to offer an overview of the world of private equity, from the point of view of the funds and their activities, of their investors , for which private equity is one of the investment classes, and of the private equity invested companies, for which private equity is a source of financing and value creation.
In particular, the course allows to know private equity as a successful entrepreneurial actor who (a) selects with a very rigorous process the companies in which he invests, (b) creates value in the companies invested through the optimization of the entrepreneurial levers: strategic / operational, financial and corporate governance and (c) divests its investments in the best way to create added value for the investors in the fund.
Private equity is therefore seen as an expression of entrepreneurial best practices that can be applied not only in specific private equity activities, but in every economic sector, to improve the business performance.

Participants in the course will have the opportunity to understand, even with the help of business cases and external professionals who will intervene in the classroom, how private equity operates and to understand its techniques.

Knowledge and understanding
In particular, the student will have the opportunity to know and understand:
- how a private equity fund works and is managed
- how the merger & acquisition process works, at an international level
- how an industrial sector is analyzed
- how to study a specific target company
- how to evaluate it in order to buy it
- what are the different steps necessary for its acquisition
- how to manage it to increase its value, using the different entrepreneurial levers
- how to sell it on the market to third parties to allow the fund investors to monetize the economic value created
- how to look at private equity as an investment class
- how to look at private equity from the point of view of the investees

Ability to apply knowledge and understanding:
- ability to identify which investments can create value and how to create it practically, also analyzing different strategic alternatives
- ability to evaluate a company with a view to acquiring it, in its various stages of life
- ability to analyze private equity as a financing alternative, including at crowdfunding level

Judgment skills:
- know how to evaluate concrete operational situations (investing / not investing, how much to pay, sell, when to sell, how to sell, how much to sell)
- know how to critically evaluate the possibilities, or not, of creating value and deciding which alternatives to choose among the various possible ones (e.g. internationalization, generalist or niche market approach)
- Evaluate a management team of the target company

The course requires the knowledge of Corporate Finance, Business Economics and Management, including accounting and financial analysis

Private Equity as an alternative investment class
- Private Equity as a source of financing
- Private Equity: different players
- Private Equity: trends in the different regions
- Private Equity: legal and operational structures
- Private Equity: the key activities
- The investment process
- Sector and target company analysis
- Evaluation of the target company
- Human capital
- The purchase: the phases and legal documents
- The due diligence process
- The creation of value
- The reporting activity of the private equity fund
- The divestment strategies
- Business cases

M. Carlotti (a cura di), Tecniche di Private Equity, EGEA (2012) (with the exclusion of chapters 4, 9, 15, 16, 17, 18, 20, 22 and 27)

A.Gervasoni, F.L. Sattin, Private Equity e Venture Capital, Guerini Next (2015) (with the exclusion of chapters 1, 2, 5, 6 e 12)


Private equity: Opportunities and risks - H. Kent Baker, Greg Fillback and Halil Kiymaz (2015)
Chapter 2 – Economics of Private Equity – S. Dutta, A. Ganguly, L. Ge
Chapter 5 – Leveraged Buyouts – C. Rauch, M.P. Umber
Chapter 7 – Distressed Debt Investments – S.G. Moyer, J.D.Martin
Chapter 8 – Valuing Private Equity – H.Platt, E.H. Trahan
Chapter 11 – Private Equity Portfolio Management – T.Meyer, T.Weidig
Chapter 13 - Exit strategies in Private Equity - D. Folus, E.Boutron
Chapter 19 - Private Equity and Value Creation – P. Harbula
Chapter 20 – Compensation Structure – J.-W. Chung

Hooke, J.C. M&A: A practical guide to doing the deal (2014)
Chapter 4 – The Three Financial Tactics the Dominate the M&A Business

International private equity, E.Talmor, F.Vasvari, (2011)
Chapter 17 – Venture capital

The final evaluation will be based on (1) an oral exam and (2) on the written analysis on an actual private equity or corporate or investment banking case (for example an acquisition, a divestiture, a merger and acquisition, issue of new stocks/securities or a restructuring, the development of a start-up).
The oral exam, testing the general knowledge of the course topics, consists of 3 questions to each of which a max of 10 points are attributed. In order to pass the exam, the score, rounded to the closest integer, must be higher than or equal to 18.The exam can be taken on the usual exam dates. If a student refuses the grade of the written exam, the re-sit grade overrides the previous one.
The subject of the analysis of the actual business case is chosen by the students and has to be pre-approved by the teaching professor. The analysis is made up by a written report and a presentation video lasting no more than 15 minutes. The analysis must be done by groups of 2-5 students. The analysis, once delivered, is no more amendable and so it will be the score, which must be at least 18, expressed in thirtieths.
The final grade is the arithmetic average of the grades of the written exam and the analysis of an actual case.
The exam is considered passed if the final vote is equal or higher than 18
The attribution of the “cum laude” is at the discretion of the instructor, provided that the final grade is 30.
Students attending the lessons are invited to actively participate to them, in particular by preparing in advance on business cases which will then be discussed in class.
The final grade will also consider their participation in the classroom and the ability to present their knowledge clearly and efficiently

Lectures, case studies and practical discussions. External professionals may also be invited to speak

The lessons will be six hours per week for a total of 30 hours over 5 weeks.
All classes are based on a very practical approach that uses cases and real business experience extensively, without neglecting a solid scientific framework. The lessons will thus be developed according to a typical business school approach. During each week lessons will
1) provide a complete theoretical framework
2) highlight the problems related to the practical application of theories
3) discuss real cases
The lessons require a strong active commitment from the participants and it is therefore suggested to read the material in advance and in particular the case studies, based on the analytical program that will be available a few days before the start of the lessons.

English

Teaching language

English

Teaching methods: in presence

Exam methods

Oral, and separately presentation of a written business case (same system for attending and non-attending students)

written and oral