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Redcliffe Training Associates Ltd
This program is designed to provide participants with a comprehensive view of private equity from the perspective of all the main participants. These include the providers of loan and bond finance, the private equity firms, the various professional advisers and the management team. The focus is largely on development capital (i.e. for firms with debt capacity) but also touches on matters relevant to venture capital.
The first, second and third day of the course covers the three key stages of the deal transaction from entry to exit. It provides an insight into the main value drivers in the process and the main areas of risk, the major structural issues that need to be considered and the structure and parameters used to gauge the optimum amount of debt/equity in the capital structure.
Participants will acquire a thorough understanding of the various types of debt that are available, including both senior and junior loans and the various types of bonds which are being used increasingly by private equity firms and corporates, as well as the key issues for the providers of both loans and bonds.
The programme covers critical issues from the perspective of the PE firm and an understanding of how their funds are structured as this means they approach transactions from a different perspective to corporates. Finally, the varied roles of management, key issues that arise for them and their interaction with the PE investors are also covered as these aspects are vital to ensure management remain properly incentivised to create value.
The programme will benefit those involved in private equity whether directly (e.g. investor, manager or lender) or indirectly, typically as a professional advisor. It adopts a pan-European approach to the topic but the presenter is able to discuss issues relevant in the USA and Asia in view of his exposure to those markets if participants require. Reference will be made to current trends and data in the markets across Europe.
Participants will be provided with numerous case studies to reinforce the various aspects and will also be provided with an LBO model which will be used to structure a transaction.
The fourth and fifth day of the course will cover the key elements of modelling in an LBO analysis. Participants will value the target business using historic data and available equity research. The valuation process will incorporate absolute and relative valuation techniques. Once the target business has been valued, participants will be introduced to LBO analysis and construct an LBO model.
The LBO modelling analysis will be developed by assessing the debt capacity of the business to determine the range of capital structures available for the transaction and how credit analysis is used in the LBO modelling process.
The participants will then cover more complex LBO instruments such as warrants and PIKs and how to calculate returns to each of the equity and debt providers.
Participants will model a more complex capital structure and calculate exit values and the IRRs generated by each investor. Using the integrated model participants will then analyse various scenarios (management case, base case, payout case) to derive the optimum financing structure taking into account the financial constraints of each investor.
The participants will undertake an adjusted present value (“APV”) analysis to determine where value has been created in the LBO transaction, using an APV model and finally look at recovery analysis for a failed LBO transaction.
Case Study: The participants will use a variety of case studies and exercises during the two days, based on publicly quoted and generic businesses.
Participants will be required to bring a laptop and a calculator to the course