B2815 - Private Equity and Venture Capital

Learning outcomes

The purpose of this course is to analyze the steps of the evaluation process and value creation employed by private equity and venture capital investors in the investment proposals they receive, and subsequently in companies where they decide to invest. A special focus is reserved to the role that institutional investors such as venture capital funds have in assisting these companies during this process. At the end of this course students should be able to: 1. Understand why venture capital and private equity investors are important and how are they structured 2. Comprehend the different phases of the venture capital and private equity cycle, namely: fundraising, selection and evaluation, business and financial planning, negotiation, deal structure, monitoring and exit 3. Analyze the different methods that these investors employ to evaluate investment opportunities 4. Understand the difficult process of deal negotiation between the target company and the institutional investor 5. Explore the different type of key securities and relative terms employed in venture capital and private equity transactions 6. Construct and apply a comprehensive buyout model and perform a leveraged buy-out analysis for a specific company

Course contents

1. The Fundamentals of Private Equity: theoretical aspects and taxonomy. 

2. The Management of Equity Investment: Fundraising, Investing, Managing, Monitoring and Investing. 

3. Company evaluation in private and venture capital

4. Financing seed and start up and financing growth. 

5. Financing Buyouts. 

6. Turnaround and distressed financing. 

7. Listing a private company. 

8. Theoretical models of Private Equity. 

9. Optimal Capital Structure in Dynamic models (stochastic approaches and target zones) 

Readings/Bibliography

1. Advanced Introduction to Private Equity by Paul A. Gompers and Steve Kaplan, Elgar Publishing, 2022.  

2. Private Equity and Venture Capital in Europe: Markets, Techniques, and Deals, by Stefano Caselli and Giulia Negri, 3rd edition, Associated Press. 

 

Teaching methods

In presence lectures 

Assessment methods

In class written exam. An optional oral exam is possible, after the written exam. It is possible to access oral exam only after passing the written exam. The oral exam can improve the grade of the written exam by no more than 4 points. In case of a bad oral exam the final grade can go further down the grade obtained in the written exam.
The evaluation grid goes as follows:

<18: failed.

18-23: sufficient.

24-27: good.

28-30: very good.

30 with laude: excellent.

The in class written exam will be two-hour long.

Teaching tools

Slides and Papers from the literature.

Office hours

See the website of Massimiliano Marzo

See the website of Paolo Zagaglia