How Can LBO Models Strengthen Private Equity Decisions?
The financial performance of a company, financing structure, potential returns, and risks are all critical for private equity investments. One of the key analytical tools in determining the feasibility of a potential transaction prior to investment of capital is referred to as Leveraged Buyout (LBO) modelling. Why Are LBO Models Important in Private Equity Decisions? […]
How Is MOIC Used to Measure Private Equity Performance?
MOIC stands for ‘Multiple on Invested Capital’ and is used to measure the performance of a private equity investment as it compares the total amount that an investor receives from a deal against the total amount of capital that he/she invested in the deal. This is therefore a useful comparison between the outcomes of buyout […]
How Does a Private Equity Analyst’s Salary Grow with Career Progression?
The salary of a private equity analyst generally increases with experience, the sophistication of their technical skills, the amount of responsibility for deals, and advancement within their private equity career, from analyst to partner. As each level of advancement is reached, there is an increased investment responsibility, greater valuation knowledge, and greater expectations of performance, […]
How Are Private Equity Deals Structured from Acquisition to Exit?
The private equity deal structure consists of a series of stages ranging from sourcing and due diligence to financing, value creation, and exit, where each stage involves a private equity deal structure that is different based on the risk, return, and control. Professional private equity training enables investment professionals to learn the interconnected relationship among […]
How Do Private Equity Firms Raise Capital from Limited Partners?
Private equity firms involve the limited partners in the investment strategy, obtain capital commitments, set up the fund structure and invest the capital in accordance with the fund objectives. A fundamental part of the private equity training is gaining an understanding of the process of private equity fundraising, how commitments are achieved and how structures […]
How Is MOIC Used to Measure Private Equity Investment Performance?
MOIC is a private equity metric that illustrates value creation and investment success on a wide variety of buyout, growth equity, and venture capital investments by comparing the total value realised with the total capital invested. What Is MOIC in Private Equity? The MOIC, or Multiple on Invested Capital, is a return metric that shows […]
How Does the Private Equity LP-GP Structure Work in Fund Management?
The private equity LP GP structure outlines the investment process of a private equity fund, which includes limited partners (LPs) investing in the fund and general partners (GPs) determining investment selection and overseeing fund operations. It is a fundamental aspect of every private equity professional course and is crucial for any professional in the private […]
How Do Private Equity Fund Economics Work in Practice?
The private equity fund economics are based on management fees, carried interest and waterfall distribution structures. These mechanisms outline the allocation of capital, profits and returns to fund managers (GPs) vs investors (LPs). What Are Private Equity Fund Economics? The overall financial framework that regulates the interaction between a fund manager and the investor is […]
Buy-and-Build Add-On Acquisitions
Buy-and-Build Add-On Acquisitions The buy-and-build private equity strategy is one of the most dynamic and action-packed strategies that private equity firms use to achieve higher returns. This is a strategy of buying an initial platform business – usually a less consolidated industry – and building up over time with smaller companies. When done right, the […]
Portfolio Turnaround in Private Equity
Portfolio Turnaround in Private Equity Not all private equity acquisitions are as planned. Market environments change, managerial capabilities fail to perform as well as expected, cost bases are less adaptable than expected, and market competition changes more quickly than the initial investment thesis supposition. The question of what actions the private equity firm can take […]