• What is Private Equity?
  
• Private Equity - Myth vs. Reality
  
• Benefits of Private Equity
  
• What Does a PE Investor Look For?
  
• Composition of Private Equity Industry

• Private equity is money invested in a company in exchange for an ownership interest.
  
  
• Consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity
  
  
• Longer investment time frame
  
  
• Typical PE firms are private partnerships or closely-held corporations funded by limited partners (LPs), such as private and public pension funds, endowment funds, foundations, corporations, wealthy individuals, foreign investors, as well as the general partners (GPs) who manage the private equity firms

• Private equity buys companies on the cheap, strips the assets and then sells them on for a quick profit
  
  Creates value for investors by buying at a fair price and building businesses, not stripping them down
  
  
• Private equity leverages up companies with unsustainable levels of debt
  
  Ensures businesses can pay interest payments required based on the level of earnings the company produces on a deal by deal basis
  
  
• Private equity operates in a shadowy and secret world
  
  Maybe true of yesteryear but firms are more open now

• Works closely with management teams to ensure more efficient capital structures are in place
  
  
• Away from the dividend requirements and short-term gaze of the public sector, it allows meaningful strategic and operational changes to be made that benefit the longer term interests of the company
  
  
• Provides facility to acquire businesses to merge with other portfolio companies, benefiting from cost efficiencies
  
  
• Rewards are directly linked to the value created through buying, building and ultimately selling businesses

• Generate cash flow from their investment
  
• Create profitable exit strategies(i.e. IPO, future sale, another LBO)

• High minimum rates of return – 25% - 35%
  
• Specific investment horizon
  
• Well-structured management
  
• Consistent earnings
  
• Excellent industry reputation
  
• Ability to meet specified operational milestones

• Venture capital firms invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors

• Financing provided for growth / expansion of a company

• Acquisition of a company using a combination of equity and debt, using the acquired company’s assets as collateral (LBO)
  
  
• Providing capital to enable current management to acquire an existing business (MBO)

• Typically debt capital giving the lender rights to convert to an ownership or equity interest if the loan is not paid back in time and in full

• Made in the debt of operationally sound, but financially distressed, middle market companies using a control-oriented strategy

• A fund set up to invest in a selection of private equity funds, which in turn invest the capital in suitable portfolio companies

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