Universitat Internacional de Catalunya

Private Equity - Advanced Corporate Finance

Private Equity - Advanced Corporate Finance
6
13366
1
First semester
OB
Main language of instruction: English

Teaching staff


Dra. MAS MACHUCA, Marta - mmas@uic.es

Instructors’ details:

Fernando García Ferrer, Head of Private Equity Spain and EMA / fgarciaferr@kpmg.es

Miguel J. Montero, Partner DA-Transaction Services / mmontero1@kpmg.es

Xavier Brossa, Partner DA-Transaction Services / xbrossa@kpmg.es

Andrés Florez, senior manager

Guillermo Labori, senior manager

Mirko Pelden, manager

Introduction

The course aims to follow the life cycle of a Private Equity Materials will be provided at each session, which will form the basis of the following discussion activities

Objectives

- Understand what Private Equity is and its stakeholders

- Private Equity and its life cycle

- The type of transactions in which Private Equity invests

- Private Equity trends and the big names in the industry

- Pre-deal: investment thesis and valuation

- Due diligence and SPAs

- Financial analysis (EBITDA, Working Capital, Debt, others)

- Post-transaction integration

- Financial and operational projections / Business Plans

- Portfolio management and operational improvement

- Bolted acquisitions and purchase and construction strategies

- Exit strategies

- Divestments

Competences/Learning outcomes of the degree programme

  • To possess and understand knowledge that provides a basis or opportunity to be original in the development and/or application of ideas, often in a research context.
  • To know how to apply acquired knowledge and be able to solve problems in new or unknown environments within wider (or multidisciplinary) contexts related to your area of study.
  • To know how to communicate your conclusions and the ultimate knowledge and reasoning that sustain them to specialized and non-specialised audiences clearly and unambiguously.
  • To have learning skills that allow you to continue studying in a self-guided and autonomous manner.
  • To work with and be part of multidisciplinary teams, and be proactive with problem-solving.
  • To have organizational and work planning skills, and be flexible enough to adapt plans to new situations.
  • To generate new ideas and critically assess alternatives when faced with multiple criteria and actors.
  • To challenge and make decisions following certain methodological rigour and assume responsibility for these decisions.
  • To communicate effectively in a professional context.
  • To reflect and think critically in interdisciplinary contexts.
  • To draw up adequate funding planning from the initial phase of a start-up to later business consolidation phases, keeping in mind business analysis, business models and economic and financial analysis.
  • To interpret and master the different start-up funding cycle models and apply them providing the most efficient funding, whether venture capital, private equity or other types of funding.
  • To detect and analyse the risk associated to financial decisions and apply strategies that reduce this risk.
  • To identify the legal aspects associated to funding entrepreneurship and financing structures, and prepare documents and clauses that allow for transaction management.
  • To analyse a start-up at a business assessment, financial modelling and accounting-financial level, and identify the key values in a corporate transaction.
  • To apply and adapt entrepreneurship and financing structure knowledge and experiences in a real context by analysing their viability, implementation and impact, by facing the creation of new market opportunities as an expert.

Syllabus

Presentation of the course:

  1. Introduction
  2. Objectives
  3. Work plan and methodology

Introduction to Private Equity (I)

  1. Definition of Private Equity (‘PE’)
  2. PE life cycle (fundraising, investment, portfolio management and exit)
  3. Outlook – Global and Europe
  4. Importance of Private Equity in the economy
  5. Type of transactions where PE invest

Introduction to Private Equity (II)

  1. Structure (e.g. LPs, GPs, Investment Committee)
  2. Management
  3. Main players (international and local)
  4. How PE looks at financials statements

Introduction to financial statements analysis

  1. Overview of the financial statements
  2. Profit and Loss
  3. Balance sheet
  4. Cash flow
  5. Financial definitions
  6. Key value drivers
  7. Case study

Transaction process I – Pre deal

  1. Investment thesis
  2. Initial information
  3. Analysis of synergies
  4. Preliminary valuation
  5. Exit options
  6. Indicative offer/MoU

Transaction process II – In deal

  1. Due diligence: key value drivers, value levers, quantification of risk and opportunities
  2. Other key findings from other dd streams (e.g. tax and legal)
  3. Value/price negotiations (EV to EqV bridge)
  4. Business Plan

Underlying earning –– Q&E, I

  1. Definition
  2. Types of adjustments (transaction boundary, one--off, run--rate pro-forma, accounting changes, estimates, manipulation)

Underlying earning –– Q&E, II

  1. Normalized EBITDA

Working capital I

  1. Why is working capital analysis important
  2. Cash conversion cycle?
  3. Underlying working capital

Working capital II

  1. Working capital pattern/seasonality
  2. Key considerations
  3. Normalization

Net Debt I

  1. Why is net debt analysis important?
  2. Definition of cash
  3. Definition of debt 

Net Debt II

  1. Net debt adjustments (financial debt-like items)

Cash flow I

  1. Direct vs indirect method
  2. EBITDA conversion rate
  3. Operating, debt service and Free cash flow
  4. Case study

Cash flow II

  1. Extraordinary cash inflows/outflows
  2. Sources and Uses
  3. Case study

Projections

  1. Key drivers
  2. Challenge to main assumptions
  3. Comparison to historical
  4. Sensitivity analysis (what if?)
  5. Adjusted vs sensitized
  6. Management case vs Bank case

Capex

  1. Introduction – Balance sheet analysis
  2. Capital Expenditure
  3. Industry differences
  4. Which business would you want?
  5. Related factors impacting recorded capex
  6. Capex or Opex(maintenance)
  7. Recurrence/Underlying capex
  8. Own work capitalized

Transaction process – Closing I

  1. SPA drafting and execution
  2. Conditions precedent
  3. Purchase price adjustment mechanisms

Transaction process – Closing II

  1. Change of control
  2. Communication plan
  3. Case study

Post deal integration

  1. Integration PMO
  2. Communication plan
  3. 100 days plan
  4. Synergies execution
  5. Stabilization phase

Portfolio management and Exit I 

  1. Controlling and reporting
  2. Build up process (add on)
  3. Recap
  4. Refinancing

Portfolio management and Exit II

  1. Improvement initiatives
  2. Exit process
  3. Valuation
  4. Management Team
  5. Due Diligence process - VDD

Teaching and learning activities

In person



Practical cases and interactive sessions

2 teachers by session

Evaluation systems and criteria

In person



40% exam

60% class attendance

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