Private Equity & Management
Buy-Outs
This course is presented in London on:
25 October 2018, 17 January 2019,
11 July 2019, 14 November 2019
This course can also be presented in-house for your company
or via live on-line webinar
▪
Course Overview Participants will:
◼ Be introduced to the reasons for the growth of private equity and leveraged buyouts
◼ Get an overview of the principles of leveraged finance
◼ Have explained to them the use of debt to drive equity value and also how to structure the transaction
◼ Be taught how to identify and close a good private equity transaction
◼ Have an overview on the ideal company characteristics of an MBO candidate and how to avoid conflicts of interest
The Growth of Private Equity and Leveraged Buyouts
◼ The academic rationale for the use of leverage • Modigliani/Miller theory
• Michael Milken’s research
◼ Growth of shareholder activism • Reviving under performers
◼ Changes in company law
◼ The development of the European high yield bond and securitisation markets The Principles of Leveraged Finance
◼ The use of debt to drive equity values • Cash flow management
▪ Reducing debt to drive equity value
◼ Operational improvements • Building “need to have”
• Incentivisation of management ▪ Getting rich together
• Cash-capture clauses
Exercise: Good or Bad LBO? Discussion of recent transactions to see which ones the attendees would do, and what lessons can be learned about elements of success or failure
◼ Structuring the transaction • Target IRR
▪ Assessing the return appropriate to the risk • Assessing debt capacity
▪ Forecasting future cash generation • Senior / mezzanine debt mix
▪ Judging asset values • Forecasting exit values
◼ Consideration of non-bank finance • High-yield bonds
▪ Terms and size of issue • Second lien debt
▪ Too much debt? • PIK finance
▪ Saint or sinner? • Vendor loan notes
Course Objectives
Case Study: Based on information provided attendees are tasked with structuring the finance for an MBO. Answers are discussed to identify the critical elements in the financing
◼ Legal elements
• Warranties and indemnities ▪ Investor protection • New Memo & Arts
▪ Incorporating P.E. control elements • Tag along and drag along clauses
▪ Control of the exit
• Veto rights for private equity ▪ Control of management
◼ Management
• Jensen and Meckling agency theory ▪ Why buyouts work
• The envy ratio
▪ Management incentivisation • Agreeing the ratchet
▪ Carrot and stick
• Good leaver / bad leaver provisions ▪ Covering under performance
Exercise: Agreeing the terms of the envy ratio Identifying and Closing a Good Transaction
◼ Ideal company characteristics • The three golden rules
◼ MBO / MBI
• Assessing management strength
◼ Meeting vendors’ expectations • Structuring the deal
◼ Avoiding conflicts of interest
• Recognising the risks of multi-layered financing
◼ Due diligence
• Investigation and verification
◼ Tie-in with contract terms
◼ Structuring the debt appropriate to the business
Discussion: How to finance the acquisition of Manchester United. The Man U accounts are reviewed with the object of deciding how to finance its acquisition. Answers are compared to the actual result.
Exit
◼ Control by P.E. house
◼ IPO
◼ Second round financing
◼ Trade sale
The trainer has over 40 years of City experience, encompassing banking, investment banking, M&A, and corporate finance at Citicorp, early stage investment, and corporate advisory work. He is a director of several companies and chairman of a fast-growing software company quoted on AIM.
Besides having been a visiting lecturer at the City of London (now Cass) Business School, he has 20 years’ experience of delivering in-house training to leading banks and
investment banks in the UK, Europe, Africa, Asia and the USA, and public courses in UK, Europe and Asia covering M&A, company valuation, investment banking, corporate finance and credit analysis.
The sale of companies to management teams backed by Private Equity investors, using a leveraged financing of the acquisition, has become an increasingly common feature of the corporate scene. Whilst appearing simple to arrange, there are complex elements to a successful transaction.
This course covers the principles and practicalities involved in arranging and negotiating a management buyout. In addition to the legal issues to be addressed, the use of bank debt and other financial instruments is examined in the context of developing a workable structure for the deal.
What Redcliffe’s clients are saying about the course:
“Great course – went through all the various types of buyouts.”
--Senior Project Manager, The Argus Group
“Focused presentation of materials and well paced. Good interactions.”
--Project Manager, BP
“Very knowledgeable trainer, a lot of real life anecdotes that bring the theory to life.”
--Corporate Finance Executive, Investec
Course Summary
09:30-17:00 London Standard Price: £625+ VAT Membership Price: £500 + VAT
9:30-17:00 London £625+VAT (£750)
In-House Training
Delivering this course in-house for a number of participants could be very cost effective. The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the
precise contents of the seminar.
Tailored Learning
All of our training courses can be tailored to suit your company’s exact training needs.
We will work closely with you to help develop a training programme with content that is unique for your organisation.
Please email us on enquiries@redcliffetraining.co.uk for more information
E-Learning
This course can also be presented as a bespoke e-learning programme created by you to fit your exact requirements.
