{"product_id":"private-equity-as-an-asset-class-isbn-9780470661383","title":"Private Equity as an Asset Class","description":"Unfairly reviled, and much misunderstood, private equity differs from all other asset classes in various important respects, not least the way in which its fund mechanisms operate, and the way in which its returns are recorded and analysed. Sadly, high level asset allocation decisions are frequently made on the basis of prejudice and misinformation, rather than a proper appreciation of the facts.  \u003cp\u003eGuy Fraser-Sampson draws upon more than twenty years of experience of the private equity industry to provide a practical guide to mastering the intricacies of this highly specialist asset class. Aimed equally at investors, professionals and business school students, it starts with such fundamental questions as ’what is private equity?’ and progresses to detailed consideration of different types of private equity activity such as venture capital and buyout.\u003c\/p\u003e \u003cp\u003eRapid and significant changes in the environment during the recent financial crisis have prompted the need for a new edition. Separate chapters have been added on growth and development capital, as well as secondary investing. Newly emergent issues are considered, such as lengthening holding periods and the possible threat of declining returns. Particular problems, such as the need to distinguish between private equity and hedge funds, are addressed. The glossary has also been expanded. In short, readers will find that this new edition takes their understanding of the asset class to new heights.\u003c\/p\u003e \u003cp\u003eKey points include:\u003c\/p\u003e \u003cul\u003e \u003cli\u003eA glossary of private equity terms\u003c\/li\u003e \u003cli\u003eVenture capital\u003c\/li\u003e \u003cli\u003eBuyout\u003c\/li\u003e \u003cli\u003eGrowth capital\u003c\/li\u003e \u003cli\u003eDevelopment capital\u003c\/li\u003e \u003cli\u003eSecondary investing\u003c\/li\u003e \u003cli\u003eUnderstanding private equity returns\u003c\/li\u003e \u003cli\u003eAnalysing funds and returns\u003c\/li\u003e \u003cli\u003eHow to plan a fund investment programme\u003c\/li\u003e \u003cli\u003eDetailed discussion of industry performance figures\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eAbout the Author xi\u003c\/p\u003e \u003cp\u003eAcknowledgements xiii\u003c\/p\u003e \u003cp\u003eIntroduction xv\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 What is Private Equity? 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat is Private Equity? 2\u003c\/p\u003e \u003cp\u003eFund investing versus direct investing 3\u003c\/p\u003e \u003cp\u003eCo-investment 4\u003c\/p\u003e \u003cp\u003eTerminology 6\u003c\/p\u003e \u003cp\u003eDifferent types of Private Equity investment 7\u003c\/p\u003e \u003cp\u003eSummary 13\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2. What are Private Equity Funds, and How do They Work? 15\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCapital: Allocated, Committed, Drawn Down and Invested 17\u003c\/p\u003e \u003cp\u003eHow do Private Equity Funds Work? 18\u003c\/p\u003e \u003cp\u003eStructure 18\u003c\/p\u003e \u003cp\u003eCash flow 20\u003c\/p\u003e \u003cp\u003eInvestment 22\u003c\/p\u003e \u003cp\u003eFundraising 23\u003c\/p\u003e \u003cp\u003ePrivate Equity Funds Distinguished from Other Fund Types 25\u003c\/p\u003e \u003cp\u003eHedge funds 25\u003c\/p\u003e \u003cp\u003eInfrastructure 27\u003c\/p\u003e \u003cp\u003ePrivate (Equity) Real Estate 28\u003c\/p\u003e \u003cp\u003eA Note on International Issues 28\u003c\/p\u003e \u003cp\u003eSummary 29\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3. Private Equity Returns – The Basics 31\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eUnderstanding the J-curve and Compound Returns 31\u003c\/p\u003e \u003cp\u003eUpper Quartile Figures 37\u003c\/p\u003e \u003cp\u003eMedian Returns 38\u003c\/p\u003e \u003cp\u003eAverage Returns 39\u003c\/p\u003e \u003cp\u003ePooled Returns 41\u003c\/p\u003e \u003cp\u003eUsing Vintage Year Returns for Benchmarking Purposes 41\u003c\/p\u003e \u003cp\u003eTime-weighted Returns 42\u003c\/p\u003e \u003cp\u003eSummary 43\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 Private Equity Returns – Multiples and Muddles 45\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMultiples 45\u003c\/p\u003e \u003cp\u003eDistributed over paid in (DPI) 47\u003c\/p\u003e \u003cp\u003ePaid in to committed capital (PICC) 47\u003c\/p\u003e \u003cp\u003eResidual value to paid in (RVPI) 47\u003c\/p\u003e \u003cp\u003eTotal value to paid in (TVPI) 48\u003c\/p\u003e \u003cp\u003eUse of multiples in industry research 48\u003c\/p\u003e \u003cp\u003eMuddles, Muggles and Markowitz 51\u003c\/p\u003e \u003cp\u003eReturns 52\u003c\/p\u003e \u003cp\u003eRisk 54\u003c\/p\u003e \u003cp\u003eLiquidity 56\u003c\/p\u003e \u003cp\u003eSummary 58\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 Buyout 59\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eTypes of Buyout Transaction 59\u003c\/p\u003e \u003cp\u003eMbo 59\u003c\/p\u003e \u003cp\u003eMbi 60\u003c\/p\u003e \u003cp\u003eBimbo 60\u003c\/p\u003e \u003cp\u003eLbo 60\u003c\/p\u003e \u003cp\u003eTake Private (P2P) 61\u003c\/p\u003e \u003cp\u003eRoll-up 62\u003c\/p\u003e \u003cp\u003eSecondary Buyouts 62\u003c\/p\u003e \u003cp\u003eOther ‘Buyout’ Activity 62\u003c\/p\u003e \u003cp\u003ePIPEs 63\u003c\/p\u003e \u003cp\u003eHow do Buyouts Work? 63\u003c\/p\u003e \u003cp\u003eCharacteristics of Buyout 67\u003c\/p\u003e \u003cp\u003eEstablished businesses 67\u003c\/p\u003e \u003cp\u003eDebt 69\u003c\/p\u003e \u003cp\u003eEarnings 70\u003c\/p\u003e \u003cp\u003eSize 71\u003c\/p\u003e \u003cp\u003eControl 74\u003c\/p\u003e \u003cp\u003eBarriers to entry 75\u003c\/p\u003e \u003cp\u003eSummary 77\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 How to Analyse Buyouts 79\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eEarnings 80\u003c\/p\u003e \u003cp\u003eEbit 81\u003c\/p\u003e \u003cp\u003eEbitda 82\u003c\/p\u003e \u003cp\u003eEarnings Growth 83\u003c\/p\u003e \u003cp\u003eMultiple 84\u003c\/p\u003e \u003cp\u003eMultiple increase (sometimes called multiple arbitrage) 85\u003c\/p\u003e \u003cp\u003eLeverage 88\u003c\/p\u003e \u003cp\u003eRecapitalisation 89\u003c\/p\u003e \u003cp\u003eTiming 89\u003c\/p\u003e \u003cp\u003eModelling and Analysing Buyout Funds 91\u003c\/p\u003e \u003cp\u003eEnterprise value 91\u003c\/p\u003e \u003cp\u003eSummary 94\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 Buyout Returns 97\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eUS versus European Buyout 97\u003c\/p\u003e \u003cp\u003eBuyout skill bases 100\u003c\/p\u003e \u003cp\u003eImperfect markets 100\u003c\/p\u003e \u003cp\u003eEarnings multiples 101\u003c\/p\u003e \u003cp\u003eEarnings growth 104\u003c\/p\u003e \u003cp\u003eLeverage 105\u003c\/p\u003e \u003cp\u003eContribution of different drivers 106\u003c\/p\u003e \u003cp\u003eFund size 107\u003c\/p\u003e \u003cp\u003eSummary 112\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 Venture Capital 113\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat is Venture Capital? 113\u003c\/p\u003e \u003cp\u003eBacking New Applications, Not New Technology 114\u003c\/p\u003e \u003cp\u003eClassification by Sector 115\u003c\/p\u003e \u003cp\u003eIt 116\u003c\/p\u003e \u003cp\u003eTelecoms 118\u003c\/p\u003e \u003cp\u003eLife Science 120\u003c\/p\u003e \u003cp\u003eClassification by Stage 123\u003c\/p\u003e \u003cp\u003eSeed stage 124\u003c\/p\u003e \u003cp\u003eEarly stage 127\u003c\/p\u003e \u003cp\u003eMid and late stages 128\u003c\/p\u003e \u003cp\u003eSummary 128\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 How to Analyse Venture 129\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Fundamentals (1) – Money Multiples 129\u003c\/p\u003e \u003cp\u003eThe Fundamentals (2) – Valuation 131\u003c\/p\u003e \u003cp\u003eValuation as an element of stated returns 131\u003c\/p\u003e \u003cp\u003eDifferences in valuation approach between Europe and the US 132\u003c\/p\u003e \u003cp\u003eVariability of Venture valuations 133\u003c\/p\u003e \u003cp\u003ePre-money and post-money valuations 135\u003c\/p\u003e \u003cp\u003eShare classes 136\u003c\/p\u003e \u003cp\u003eThe Fundamentals (3) – Cost and Value 136\u003c\/p\u003e \u003cp\u003eIRRs and multiples 138\u003c\/p\u003e \u003cp\u003eGoing in equity (GI%) 139\u003c\/p\u003e \u003cp\u003ePercentage of the holding within the fund 139\u003c\/p\u003e \u003cp\u003eThe Impact of Home Runs 139\u003c\/p\u003e \u003cp\u003eSummary 142\u003c\/p\u003e \u003cp\u003e\u003cb\u003e10 Venture Returns 145\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eUS Outperformance versus Europe 145\u003c\/p\u003e \u003cp\u003eMoney multiples drive IRRs 145\u003c\/p\u003e \u003cp\u003eHome runs and the golden circle 147\u003c\/p\u003e \u003cp\u003eMarket conditions 149\u003c\/p\u003e \u003cp\u003eEuropean Venture – Is it as Bad as it Seems? 151\u003c\/p\u003e \u003cp\u003eReturns and Fund Size 154\u003c\/p\u003e \u003cp\u003eVenture returns by stage 158\u003c\/p\u003e \u003cp\u003eWhat of the Future? 159\u003c\/p\u003e \u003cp\u003eSummary 161\u003c\/p\u003e \u003cp\u003e\u003cb\u003e11. Growth and Development Capital 163\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe PLC and the BCG Growth Matrix 164\u003c\/p\u003e \u003cp\u003eDevelopment Capital 166\u003c\/p\u003e \u003cp\u003eTarget companies 166\u003c\/p\u003e \u003cp\u003eMoney in deals 166\u003c\/p\u003e \u003cp\u003eMoney out deals 167\u003c\/p\u003e \u003cp\u003eObjectives 167\u003c\/p\u003e \u003cp\u003eGrowth Capital 168\u003c\/p\u003e \u003cp\u003eTarget companies 168\u003c\/p\u003e \u003cp\u003eObjectives 169\u003c\/p\u003e \u003cp\u003eGrowth capital and late-stage Venture 170\u003c\/p\u003e \u003cp\u003eCommon Issues 171\u003c\/p\u003e \u003cp\u003eMinority protection 171\u003c\/p\u003e \u003cp\u003eExit protection 173\u003c\/p\u003e \u003cp\u003eThe Future 174\u003c\/p\u003e \u003cp\u003eSummary 175\u003c\/p\u003e \u003cp\u003e\u003cb\u003e12. Secondary Private Equity Fund Investing 177\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhy do People Buy Secondaries? 178\u003c\/p\u003e \u003cp\u003eTime and the J-curve 178\u003c\/p\u003e \u003cp\u003eDiversification by time 180\u003c\/p\u003e \u003cp\u003eDiversification by geography and sector 181\u003c\/p\u003e \u003cp\u003eTreasury and Portfolio Secondaries 181\u003c\/p\u003e \u003cp\u003eWhy do People Sell Secondaries? 182\u003c\/p\u003e \u003cp\u003eChange of strategy\/leaving the asset class 182\u003c\/p\u003e \u003cp\u003eOverconcentration by time, sector or geography 183\u003c\/p\u003e \u003cp\u003eUnexpected need for cash 183\u003c\/p\u003e \u003cp\u003eHousekeeping 184\u003c\/p\u003e \u003cp\u003eDissatisfaction with the GP 184\u003c\/p\u003e \u003cp\u003eRestrictions on Transfer 184\u003c\/p\u003e \u003cp\u003eStapled primaries 185\u003c\/p\u003e \u003cp\u003eSecondary Methodology 186\u003c\/p\u003e \u003cp\u003eTails 187\u003c\/p\u003e \u003cp\u003eFees etc. 188\u003c\/p\u003e \u003cp\u003eSecondary Buyouts – A Warning 189\u003c\/p\u003e \u003cp\u003eSummary 189\u003c\/p\u003e \u003cp\u003e\u003cb\u003e13. Due Diligence 191\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eBuyout Funds 193\u003c\/p\u003e \u003cp\u003eVenture Funds 194\u003c\/p\u003e \u003cp\u003eCo-investors 196\u003c\/p\u003e \u003cp\u003eCross-fund Investing 197\u003c\/p\u003e \u003cp\u003eBuyout Companies 198\u003c\/p\u003e \u003cp\u003eVenture Companies 199\u003c\/p\u003e \u003cp\u003eFunds of Funds 200\u003c\/p\u003e \u003cp\u003eGrowth and Development Capital 201\u003c\/p\u003e \u003cp\u003eMonitoring Private Equity Funds 202\u003c\/p\u003e \u003cp\u003eThe Changing Nature of Due Diligence 204\u003c\/p\u003e \u003cp\u003eSummary 204\u003c\/p\u003e \u003cp\u003e\u003cb\u003e14. Planning Your Investment Programme 207\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCash Flow Planning 207\u003c\/p\u003e \u003cp\u003eAllocated, Committed and Invested Capital 208\u003c\/p\u003e \u003cp\u003eDiversification by Time 209\u003c\/p\u003e \u003cp\u003eProper Commitment Levels 210\u003c\/p\u003e \u003cp\u003eDiversification by Sector and Geography 212\u003c\/p\u003e \u003cp\u003eTotal Return 215\u003c\/p\u003e \u003cp\u003eHow to deal with uninvested capital 215\u003c\/p\u003e \u003cp\u003eTowards a New World of Private Equity Programmes? 218\u003c\/p\u003e \u003cp\u003eSummary 219\u003c\/p\u003e \u003cp\u003e\u003cb\u003e15. Trends and Issues 221\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eFinancial Crisis 222\u003c\/p\u003e \u003cp\u003eCredit 222\u003c\/p\u003e \u003cp\u003eValuation 224\u003c\/p\u003e \u003cp\u003eHolding periods 225\u003c\/p\u003e \u003cp\u003eSecondaries 227\u003c\/p\u003e \u003cp\u003eEmerging Markets 228\u003c\/p\u003e \u003cp\u003eConcluding Thoughts 229\u003c\/p\u003e \u003cp\u003eTrack record 230\u003c\/p\u003e \u003cp\u003eReturns 230\u003c\/p\u003e \u003cp\u003eFee structures 231\u003c\/p\u003e \u003cp\u003ePrivate Equity at a Crossroads? 232\u003c\/p\u003e \u003cp\u003eSummary 233\u003c\/p\u003e \u003cp\u003eGlossary of Private Equity Terms 235\u003c\/p\u003e \u003cp\u003eIndex 259\u003c\/p\u003e \u003cp\u003e\u003cb\u003e\u003ci\u003eAbout the author\u003c\/i\u003e\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eGUY FRASER-SAMPSON\u003c\/b\u003e has over twenty years’ experience of the private equity industry, most notably having set up and run for several years the European operations of Horsley Bridge. As a partner in the firm, and Managing Director of Horsley Bridge International, he had a unique opportunity to interact simultaneously with private equity managers from all over the world, including famous ‘golden circle’ venture firms based predominantly in California. He previously lived and worked in the Middle East as Investment Controller with the Abu Dhabi Investment Authority (ADIA). \u003c\/p\u003e\u003cp\u003eHe has extensive experience of the evaluation of private equity managers, including having personally designed and developed a computer model for the evaluation of buyout performance, but is equally recognised as an expert on venture capital. In addition to his work with funds, he has also conducted direct, secondary and mezzanine transactions over the years.  \u003c\/p\u003e\u003cp\u003eGuy teaches post-graduate modules on private equity and investment strategy at Cass Business School in the City of London, and is also recognised as an authority on all types of alternative assets. He performs consultancy and high level executive training assignments for clients around the world, and is also in demand as a provider of keynote addresses at investment conferences. He conducts regular investor workshops around the world based upon his books.   \u003c\/p\u003e\u003cp\u003eUnfairly reviled, and much misunderstood, private equity differs from all other asset classes in various important respects, not least the way in which its fund mechanisms operate, and the way in which its returns are recorded and analysed. Sadly, high level asset allocation decisions are frequently made on the basis of prejudice and misinformation, rather than a proper appreciation of the facts.\u003c\/p\u003e \u003cp\u003eGuy Fraser-Sampson draws upon more than twenty years of experience of the private equity industry to provide a practical guide to mastering the intricacies of this highly specialist asset class. Aimed equally at investors, professionals and business school students, it starts with such fundamental questions as ‘what is private equity?’ and progresses to detailed consideration of different types of private equity activity such as venture capital and buyout. \u003c\/p\u003e\u003cp\u003eRapid and significant changes in the environment during the recent financial crisis have prompted the need for a new edition. Separate chapters have been added on growth and development capital, as well as secondary investing. Newly emergent issues are considered, such as lengthening holding periods and the possible threat of declining returns. Particular problems, such as the need to distinguish between private equity and hedge funds, are addressed. The glossary has also been expanded. In short, readers will find that this new edition takes their understanding of the asset class to new heights.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989856239845,"sku":"NP9780470661383","price":68.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9780470661383.jpg?v=1761785692","url":"https:\/\/k12savings.com\/products\/private-equity-as-an-asset-class-isbn-9780470661383","provider":"K12savings","version":"1.0","type":"link"}