The Fundamentals of Private Equity

Training Program

The Fundamentals of Private Equity

The training Fundamentals of Private Equity is designed to introduce you to the key mechanisms of private equity and help you understand its role in financing and developing companies.

Whether you are an investor, entrepreneur, or finance professional, mastering the fundamental concepts of this asset class is essential, as it plays a central role in the growth of unlisted companies.

This training will allow you to explore the different stages of the private equity investment cycle: fundraising, opportunity selection, deal structuring, value creation, and exit strategies. You will learn to differentiate between the main investment strategies (venture capital, growth capital, LBO), analyze valuation mechanisms, and understand the legal and tax-related issues involved.

Through a pedagogical approach combining theory and case studies, you will develop a clear understanding of the dynamics of private equity and be able to assess investment opportunities while grasping the inherent risks of this industry.

Training Objectives

• Identify private equity players: Understand the typology of different actors and the role of an investment manager.
• Understand leverage and cost of capital: Master key financial concepts to structure an investment.
• Differentiate between a management company and a fund: Grasp the legal and regulatory distinctions between these structures.
• Know the different investment phases: From opportunity selection to exit strategy.
• Understand the types of due diligence: Study financial, operational, legal, and technological audits.
• Master valuation methods for unlisted companies: Apply techniques such as market multiples and discounted cash flow analysis.
• Understand shareholder agreements: Analyze their strategic role in negotiations and governance.
• Decode the functioning of a venture capital fund: Explore the relationship between LPs (limited partners) and GPs (general partners).
• Interpret a fund's performance ratios: Learn to analyze DPI, RVPI, and TVPI to evaluate investment returns.

Target Audience

• Fund manager
• Junior private equity investment manager
• Portfolio manager
• Wealth manager
• Management assistant
• Financial analyst
• Bank treasurer
• Corporate treasurer
• Financial engineer

Training Duration

• 2 days (14 hours)

Training Program

The Fundamentals of Private Equity

I. Definition, Characteristics, and Ecosystem of Private Equity

• Definition and key characteristics of Private Equity
• Private Equity vs. Equity Market: Key Differences
• Role and cost of capital increase: Cost of equity vs. Cost of debt
• Leverage effect: Understanding its impact
• Minority vs. Majority Participation
• Active vs. Passive Investment

II. The Private Equity Ecosystem

• Startups, growing companies, mature companies
• Types of players:
• • Management company vs. Investment fund
  • FCP vs. SCR
  • LP (Limited Partners) and GP (General Partners)
  • Venture Capital, Growth Capital, and LBO Funds
• Daily responsibilities of an Investment Manager

Practical Case:

Analysis of a Venture Capital Fund prospectus

III. The Private Equity Investment Process

• Pre-investment phase:
• • Business plan analysis
  • Meeting with the management team
  • Operational, financial, legal, and technological audits
• Investment phase:
• • Valuation and multiple-based approach
  • Discounted cash flow (DCF): IRR and discount rate
  • Financial structuring: Shares, Convertible Bonds, OBSA, ABSA
  • Shareholders’ agreement and key clauses
• Post-investment phase:
• • Investment monitoring and governance
  • Exit strategies: Industrial buyout, IPO, or divestiture
  • Managing failures and assessing risk probabilities

Practical Case:

Review of real-life cases: Successes and failures

IV. Performance Indicators of a Venture Capital Fund

• The lifecycle of a Private Equity fund:
• • J-Curve and "Cash Drag" management
  • Capital calls and commitment tracking
• LP-GP Relationship:
• • Clawback provision
  • Distribution waterfall
  • No-default divorce
• Compensation mechanisms in Private Equity funds:
• • Carried interest and management fees
  • Transaction fees and monitoring fees
  • Adjustment mechanisms: Ratchet and Hurdle rate
• Key Private Equity performance ratios:
• • PIC (Paid-in Capital), Committed Capital, and their impact
  • DPI (Distributed to Paid-in): A key performance indicator
  • RVPI (Residual Value to Paid-in): Assessing unrealized gains

Practical Case 1:

Calculation of carried interest

Practical Case 2:

Review of Private Equity fund performance ratios