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Private Equity

Introduction to Private Equity

A plain-English introduction to private equity: how funds work, who invests, how buyouts are financed and improved, and how performance is measured.
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Level
Beginner
Lessons
13 lessons
Length
3.8 hours
Modules
4 modules

Module 1 · What private equity is

50 min

  1. 1.1

    1.1 Defining private equity Free preview

    What private equity is: long-term, hands-on investment in unlisted companies, and how it differs from buying shares on a stock exchange.

    15 min
  2. 1.2

    1.2 How the industry grew

    How private equity grew from a few specialist firms into large, diversified managers, and why investors kept putting money into it.

    15 min
  3. 1.3

    1.3 Private equity strategies

    The main private equity strategies, from venture capital to buyouts and secondaries, and how stage, control and leverage shape their risk and return.

    20 min

Module 2 · Funds and investors

70 min

  1. 2.1

    2.1 Fund basics: GPs, LPs and the limited partnership

    How a private equity fund is built: the GP, the LPs, the management company, the limited partnership agreement and the fund's fixed life.

    15 min
  2. 2.2

    2.2 Commitments, capital calls and distributions

    How LP commitments are drawn over time, how distributions return money, and why a fund's cash flows trace the J-curve.

    20 min
  3. 2.3

    2.3 Fees and carried interest

    How private equity managers are paid: management fees, carried interest, the hurdle and catch-up, and how a distribution waterfall splits the proceeds.

    20 min
  4. 2.4

    2.4 Who invests, and why

    The main investors in private equity, the routes they use to get exposure, and what they look for when choosing a manager.

    15 min

Module 3 · Deals and portfolio companies

55 min

  1. 3.1

    3.1 Finding and evaluating deals

    How a buyout firm finds companies, screens them, runs due diligence and gets from investment committee approval to closing, and who does what.

    15 min
  2. 3.2

    3.2 How a buyout is financed

    How a buyout is priced as a multiple of EBITDA, paid for with fund equity and borrowed money, and why that debt magnifies both gains and losses.

    20 min
  3. 3.3

    3.3 Creating value in portfolio companies

    How private equity owners grow a company's value, the role of the board and management incentives, and how a value creation bridge explains the gain.

    20 min

Module 4 · Performance, accounting and exits

50 min

  1. 4.1

    4.1 Exits and the end of a fund

    How private equity funds turn investments back into cash: trade sales, secondary buyouts, IPOs, recaps and continuation funds, then wind-down.

    15 min
  2. 4.2

    4.2 Measuring performance

    IRR, MOIC, DPI, RVPI and TVPI worked through for Ashcombe Capital Fund I, plus gross versus net returns and why IRR and multiples disagree.

    20 min
  3. 4.3

    4.3 Fund accounting and valuation basics

    Capital accounts, NAV and quarterly fair-value marks: how a private equity fund keeps score, and what LPs receive in their reports.

    15 min

Final assessment