IC309: Private Equity and Venture Capital

Module code: IC309

Module provider: ICMA Centre; Henley Business School

Credits: 20

Level: 6

When you'll be taught: Semester 2

Module convenor: Dr Keith Arundale, email: k.arundale@icmacentre.ac.uk

Pre-requisite module(s):

Co-requisite module(s):

Pre-requisite or Co-requisite module(s):

Module(s) excluded:

Placement information: na

Academic year: 2024/5

Available to visiting students: Yes

Talis reading list: No

Last updated: 19 November 2024

Overview

Module aims and purpose

The principal aim of the module is to familiarise students with the private equity (PE) and venture capital (VC) fund raising and investment process. The purpose is to develop students’ appreciation of the practical aspects of investing by PE and VC firms, understanding the dynamics between the venture capital investor and the entrepreneur, and also the practicalities of raising PE&VC funds from institutional investors. The focus of the module is on venture capital and high-growth ventures from the viewpoints of both the entrepreneur or management team and of the investing institution (general partner), although private equity as a whole is covered (including management buyout transactions) as well as the relationship between the private equity or venture capital firm and its own investors (limited partner institutions). This is a highly practical module; extensive use will be made of case studies and a group project in addition to guest seminars from invited experienced practitioners and entrepreneurs.

This module is intended for students who may be interested at some stage in their careers in raising private equity or venture capital finance for an entrepreneurial venture or management buyout, or who see themselves working in a professional investment capacity (e.g.,Ìýwith a private equity firm as an investment executive) or as an investor with a pension fund, bank or insurance company or as a corporate finance adviser, or who simply want to gain an understanding of how the private equity and venture capitalÌýfundraisingÌýand investment process works.Ìý

Module learning outcomes

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

• explain the different strategies for establishing a private equity or venture capital fund and describe the contents of a private placement memorandum for raising a fund and the basic terms and conditions which codify the obligations of, and the relationship between, the general partner and the limited partners.
• explain the private equity investment process and how private equity and venture capital firms assess, structure and monitor their deals for both venture capital deals and management buyouts, including conducting initial and external due diligence and the negotiation of offer letters (term sheets) for the investment.Ìý
• prepare a business plan (in self-selected coursework groups) for the purpose of raising finance and explain how a venture capital investment executive goes about evaluating a business plan. Ìý
• describe the principal exit routes, with the pros and cons of each route to exit, and how private equity firms and venture capital firms measure and make a return on their investments.Ìý

Module content

The content will be delivered over 10 lectures covering:
Ìý

1. Introduction to private equity and venture capital / Stages of investment / Data and trends
2. Private equity funds / The GP/LP relationship / PPMs /PE as an asset class
3. Business planning process
4. Approaching VC firms / Other sources of entrepreneurial finance
5. The venture capital investment process / Term sheetsÌýÌý
6. Management buyout deals
7. Due diligence / Legal agreements
8. Different strategies; sector focus
9. Monitoring the investment / Adding value / Exit routes
10. Valuation, Regulation, Measuring PE performance

Core reading material (available on Blackboard):

• Guide to Private Equity (2010) BVCA (written by module convenor)
• Gilligan J and Wright M (2014) Private equity demystified - an explanatory guide. 3rd edition

Structure

Teaching and learning methods

The core theory and concepts will be presented during 10 face to face two hour lectures, supplemented by 10 face to face one hour seminars (class exercises and discussion of various cases, drawn from the lecturer’s range of contacts with venture capital firms, business angels and entrepreneurs). Guest speakers from the venture capital industry and/or entrepreneurs will be invited to discuss practical issues related to the topics covered on the course. Students will engage, in groups, in the preparation of a business plan (Group project) and subsequently individually on answering set questions on their group’s business plan in essay format (Essay). The digital discussion board will be used to discuss current press articles on PE&VC and various aspects of the course. One to one and group meetings will be held digitally over Teams (or face to face if preferred and by arrangement).

Study hours

At least 30 hours of scheduled teaching and learning activities will be delivered in person, with the remaining hours for scheduled and self-scheduled teaching and learning activities delivered either in person or online. You will receive further details about how these hours will be delivered before the start of the module.

Please note the independent study hours above are notional numbers of hours; each student will approach studying in different ways. We would advise you to reflect on your learning and the number of hours you are allocating to these tasks.

Semester 1 The hours in this column may include hours during the Christmas holiday period.

Semester 2 The hours in this column may include hours during the Easter holiday period.

Summer The hours in this column will take place during the summer holidays and may be at the start and/or end of the module.

Assessment

Requirements for a pass

Overall pass mark is 40% for module as a whole, comprised group coursework project and individual essay.

Summative assessment

Penalties for late submission of summative assessment

The Support Centres will apply the following penalties for work submitted late:

Assessments with numerical marks

• where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of three working days;
• the mark awarded due to the imposition of the penalty shall not fall below the threshold pass mark, namely 40% in the case of modules at Levels 4-6 (i.e. undergraduate modules for Parts 1-3) and 50% in the case of Level 7 modules offered as part of an Integrated Masters or taught postgraduate degree programme;
• where the piece of work is awarded a mark below the threshold pass mark prior to any penalty being imposed, and is submitted up to three working days after the original deadline (or any formally agreed extension to the deadline), no penalty shall be imposed;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

Assessments marked Pass/Fail

• where the piece of work is submitted within three working days of the deadline (or any formally agreed extension of the deadline): no penalty will be applied;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension of the deadline): a grade of Fail will be awarded.

The University policy statement on penalties for late submission can be found at: /cqsd/-/media/project/functions/cqsd/documents/qap/penaltiesforlatesubmission.pdf

You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

Formative assessment

Formative assessment is any task or activity which creates feedback (or feedforward) for you about your learning, but which does not contribute towards your overall module mark.

Feedback is provided by module convenor on students’ group projects prior to submission of the individual essay

Reassessment

Additional costs