98764 - PRIVATE EQUITY LAB

Academic Year 2023/2024

Learning outcomes

The purpose of this laboratory is to analyze the steps of the evaluation process (due diligence) employed by private equity investors in the evaluation of the investment proposals they receive. At the end of the course, students should be able to: 1. Evaluate alternative investment opportunities from the point of view of the investor 2. Understand the difficult process of deal negotiation between the entrepreneurs and the institutional investor 3. Implement a full business plan financial due diligence 4. Construct and apply a comprehensive buyout model and perform a leveraged buy out analysis for a specific company

Course contents

The laboratory will apply the concepts learned in the related theoretical course of Management Consulting. In the Lab, various applications and simulations will be implemented, strictly connected to the theoretical concepts explained in the course:

- Revenues and cost forecasting for early ventures (from a VC point of view)

- simulations of the due diligence process applied to various business cases;

- simulations of business plan feasibility for private equity operations

Readings/Bibliography

Entrepreneurial Finance: Venture Capital, Deal Structure & Valuation, Second Edition, Smith, Janet Kiholm; Smith, Richard L. (2019), Stanford University Press

Investment banking: Valuation, Leveraged buyouts, and Mergers and Acquisitions, 2nd ed, Pearl, Joshua and Rosenbaum, Joshua. (2013), Wiley.

Teaching methods

The Private Equity Lab has a very practical approach. In particular students will engage in solving problems, discussing case studies and presenting business plans for early ventures.

Assessment methods

It is required to build the business plan of an early venture with 3 year forecasting of costs and revenues. It will be valued from the perspective of a venture capitalist. Alternatively, students will have to perform a due diligence analysis of an innovative operating firm.

The passing grades for students are in the range 18-30 cum laude (30L). These grades are based on the following evaluation criteria:

18-23: The student has sufficient preparation and analytical skills, spread however, over just few topics taught in the course, the overall jargon is correct.
24-27: The student shows an adequate preparation at a technical level with some doubts over the topics. Good, yet not too articulated analytical skills with the use of a correct jargon.
28-30: Great knowledge about most of the topics taught in the course, good critical and analytical skills, good usage of the specific jargon.
30 cum laude (30L): Excellent and in depth knowledge of all the topics in the course, excellent critical and analytical skills, excellent usage of specific jargon.

Teaching tools

Excel

Databases available to UniBo students and faculty

Office hours

See the website of Andi Duqi