The Private Equity Toolkit: A Step-by-Step Guide to Getting Deals Done from Sourcing to Exit

Preface

Acknowledgments

Chapter 1: First Thoughts on Deal Sourcing

Key Topics:

Why deal sourcing remains an obscure field

Six action steps to take today to enhance your deal origination prowess

Proven deal sourcing strategies and the search for the mythical proprietary deal

How to assess your current deal sourcing capabilities

Key trends to look for now to spot future private equity deals ahead of others

Chapter 2: Thematic Deal Sourcing

Key Topics:

Take the mystique out of thematic deal sourcing with the ICEBERG Roadmap (TM)

An effective way of breaking down your deal search into simple, executable steps

How you can systematically generate promising investment themes

Best practices for mapping out an industry, finding deals and meeting sector experts

A time-tested strategy for approaching companies directly

How to make the most out of your first meeting with a deal target

Chapter 3: Opportunistic Deal Sourcing

Key Topics:

Develop an edge in opportunistic deal sourcing with the DATABASE Roadmap (TM)

No luck required: why having a clear focus pays off in an opportunistic deal search

Actions you can take now to get the most out of your professional network

How active brand management can help your fund stay top of mind

Creative ways to supplement your opportunistic deal ideas

How to manage your deal origination workflows effectively and effortlessly

Does a dedicated business development function work for everyone?

Chapter 4: Deal Selection: Eliminating the Wrong Deal

Key Topics:

Why killing deals is as important as doing deals

How skilled investors overcome biases and minimize investment errors

Why the best investment of your career might be a deal you never pursue

Nine deal breakers you need to check for before proceeding on any deal

Chapter 5: Deal Selection: Identifying the Right Deal

Key Topics:

Save time and effort: why it makes sense to evaluate the transaction dynamic first

If you choose to remember one thing about deal selection, make it the business model

The four most common sources of competitive advantage for any business

Forget the detail: just a few key financial metrics that matter for deal selection

How clever structuring can help you overcome valuation concerns

Chapter 6: Assessing the Top Management Team

Key Topics:

Why motivating superb managers is the key ingredient in private equity's secret sauce

Why the best CEOs are not the charismatic and articulate leaders we see in movies

What makes the job of a private equity CEO among the most demanding in the world

Nine key qualities to look out for when assessing CEOs for private equity businesses

How you can apply the latest best practices in your assessment of management teams

Chapter 7: Analyzing the Business Plan

Key Topics:

Why skilled investors explore business fundamentals before diving into the numbers

Key problem areas to spot immediately in every business plan you review

How to poke holes in overoptimistic projections and make your investment case add up

Ten cold, hard questions that every solid business plan needs to address

My trusted business plan tool: Master List of Most Common Drivers of Value Creation

Chapter 8: Valuation

Key Topics:

Enterprise value, headline price and cash consideration: why they are each different

How experienced investors use flawed valuation methods and still get to the right answer

Seven valuation metrics and six valuation methods I like (and hate) to use

Two valuation approaches for those times when you find "difficult to value" companies

You've done the valuation: how much will you pay to win the deal?

Chapter 9: Deal Structuring

Key Topics:

Capital structure considerations: what type of leverage to use and when is too much?

Management Incentive Plans: target A, reward A and achieve A

Enhance your deal through earn-outs, earn-ins, escrows and vendor loan notes

Minority deals: negotiate robust exit rights or be held hostage by majority owners

Advanced deal structuring techniques for minority investments

Chapter 10: Deal Execution: Transaction Process and Due Diligence

Key Topics:

What to expect in a typical private equity transaction process

Don't "boil the ocean": ten principles of a well-managed due diligence effort

Who does what and why you need it: an anatomy of the key due diligence workstreams

Chapter 11: Deal Execution: Legal Documentation

Key Topics:

Why you don't need to be a lawyer to provide valuable input in legal negotiations

How to translate due diligence findings into legal clauses in the deal documentation

My cheat sheet summary of common issues in the key transaction agreements

Chapter 12: Adding Value Through Active Ownership

Key Topics:

Develop your own success formula with a Value Creation Plan

Four value-accretive actions for every portfolio company to consider

Create powerful performance improvement momentum with a 100-Day Plan

Governance and reporting: strategic priorities of a well-run private equity board

When things go wrong: spot the first signs of company distress and take radical action

Chapter 13: Exit Strategies and Deal Monetization

Key Topics:

How to exit a minority investment (effortlessly)

Exiting a majority transaction: should you time the market?

Conventional exit routes: an IPO, strategic sale or sponsor-to-sponsor buyout

Can't exit your investment? Alternative deal monetization strategies to the rescue

The finishing touch: exit preparation roadmap for every portfolio company

Notes

Index