ICM312-Private Equity and Venture Capital

Module Provider: ICMA Centre
Number of credits: 10 [5 ECTS credits]
Level:7
Terms in which taught: Spring term module
Pre-requisites:
Non-modular pre-requisites:
Co-requisites:
Modules excluded: IC309 Private Equity and Venture Capital
Current from: 2022/3

Module Convenor: Dr Keith Arundale
Email: k.arundale@icmacentre.ac.uk

Type of module:

Summary module description:

The objective of this module, which is delivered at the ICMA Centre, is to develop students’ appreciation of the practical aspects of raising private equity or venture capital finance for a management buyout or earlier-stage company, growing the business through the close working relationship between the PE or VC firm and the management team and achieving a successful exit. Both private equity and venture capital deals are covered on this module from the viewpoints of both the entrepreneur or management team and of the investing institution (general partner) as well as the relationship between the PE or VC firm and its own investors (limited partner institutions). Extensive use will be made of case studies and a business plan project in addition to guest seminars from invited experienced practitioners.

Aims:

To familiarise students with the practicalities of the private equity and venture capital investment process, including the preparation of a business plan for the purpose of raising finance for a management buyout (MBO) or VC proposition.

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Assessable learning outcomes:

By the end of the module it is expected that students will be able to:Ìý

• Discuss the real world processes involved, and issues, in raising private equity and VC finance including finance for early stage, expansion and MBO dealsÌýÌý


• Discuss other sources of finance, such as business angels, crowdfunding, government sources and bank debt


• Explain the characteristics of private equity as an alternative asset class, private equity investments in other alternative asset classes (real estate, commodities, art and antiques), and the different strategies for establishing a private equity fund


• Discuss the current issues and challenges facing the private equity and VC industry and how the industry is structuredÌý


• Be able to prepare a business plan for the purpose of raising finance for an MBO or early-stage or expansion propositionÌý


• Describe the PE and VC investment processes and how private equity firms appraise, structure and monitor their dealsÌý


• Be able to negotiate a term sheet and final shareholders agreement


• Explain how the private equity or VC firm monitors and aims to add value to the investmentÌý


• Describe the various exit routes and explain how private equity and VC firms make a return on their investments.

Additional outcomes:

The module offers students the opportunity to work together to develop team-building and presentation skills as they discuss the case studies and prepareÌýa business plan for the purpose of raising finance with the option to present the plan to a panel of judges for informal feedback.Ìý

Outline content:

• Private equity as an asset classÌý


• Structure and management of private equity and VC firms, including limited liability partnerships and the fund raising processÌý


• Trends and issues in the global and European private equity and VC marketplacesÌý


• Other sources of finance, including working capital management, bank debt, mezzanine, government initiatives (including ECFs and VCTs), crowdfunding and business angelsÌý


• Business planning process, incl USPs, SWOT analysis, market and risk analysis, financial scenariosÌý


• Selecting and approaching private equity and VC firms, including stage and sector focus, and review of current "hot" sectors for investment. Specific issues with regard to corporate venturing an d university spin-outs.Ìý


• Venture capital investment process, including financial, commercial and technical due diligence, arriving at the equity stake, terms sheets, negotiations, structuring the deal,Ìý


• Management buyouts, including routes to added value, leveraged deals, types of debt, structuring the buyoutÌýÌý


• Tax and legal issues, including the shareholder’s agreement, warranties and indemnitiesÌý


• Monitoring the investmentÌý


• Valuation of investments in early and later stage companies


• Exit routes, including IPOs and trade sales.

Global context:

The fund raising and investment processes discussed on this module have essentially global applicability.

Brief description of teaching and learning methods:

The core theory and concepts will be presented during lectures. Small class groups will discuss various cases, drawn from the lecturer’s range of contacts with PE and VC firms, business angels and entrepreneurs. Negotiation of term sheets will be discussed in class.Ìý

Guest speakers from the private equity and VC industry will be invited to discuss practical issues related to the topics covered on the course.

Summative assessment- Examinations:

One hour closed book written examination.

The examination for this module will require a narrowly defined time window and is likely to be held in a dedicated exam venue.

Summative assessment- Coursework and in-class tests:

Group preparation of business plan for real-life or fictitious technology or other sector focused early-stage company .

Participants may also choose to prepare a business plan for a management buyout or management buy-in opportunity.

4,000 to 5,000 word business plan coursework project, excl appendices. To be submitted in week of final formal lectures.Ìý

Formative assessment methods:

Students will have the option to present their business plan to a panel of judges who will provide informal, oral feedback on their plans. The presentations will take place prior to the written plan submission deadline so that students can incorporate any recommendations in their plans prior to submission. The module convenor will provide formal written feedback on the students’ written plan prior to the written examination.Ìý

Penalties for late submission:

Penalties for late submission on this module are in accordance with the University policy. Please refer to page 5 of the Postgraduate Guide to Assessment for further information:

Assessment requirements for a pass:

50% weighted average mark

Reassessment arrangements:

By written examination only, as part of the overall examination arrangements for the MSc programme.

Additional Costs (specified where applicable):

Core texts available on BlackBoard free of chargeÌýÌý

Last updated: 22 September 2022