2 Day Course                                                                       
 Dates                                                                           
 
17-18 November 2008
12-13 February 2009
24-25 June 2009
18-19 November 2009

 Course Overview

This course gives participants a detailed insight into the modelling of leveraged acquisitions as well as the world of private equity. It improves participants’ understanding of the attractions and risks of levered structures, whether used by private equity firms or by corporates to finance acquisitions. In analysing the motivations of the different players, participants will consider the causes and chances of success and failure.

This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.

Hands-on interactive training is punctuated by numerous practical examples throughout each day. The course is logical and progressive, enabling participants to build up a comprehensive understanding of buyouts. It will draw heavily on newly-developed case material. During the course participants will progressively incorporate more complicated features into their own analysis of a real transaction, to the point where they will have a complete transaction model by the end of the course, slightly simplified and stylised to maximise learning benefits. Participants will input and make assumptions for levels of debt, equity requirements, debt covenants and repayment profiles, the split of equity proceeds on exit and the IRRs available to equity holders

Participants will be required to bring a scientific calculator and a laptop with USB port to the course.

 Course Content

 DAY ONE

Making money in leveraged finance
How leveraged finance works
   • How investors make money
   • Drivers on gains
   • The rationale for leveraged finance
Review of the market for private equity
   • Private equity fundamentals
   • How private equity players make their money
   • Firm structure
   • Private equity life cycle
Jargon-busting

Analysing buy outs - detailed case study
Analysing and discussing the suitability of a target
   • What makes a business suitable for a buy out or leveraged acquisition
   • The role of fundamental business analysis
   • Possible attractions to equity providers
   • Understanding the target’s ability to raise debt
   • Traps for the unwary
Modelling an acquisition
   • Model construction: participants will complete a partially-developed
    financial model for the case study which integrates P & L, balance sheet
    and cash flow. This model will be used to analyse an acquisition
    of the business

Structuring the acquisition – sources & uses of funds
Introduction to the fundamental principles of deal structuring
Exploring “sources & uses” - a key learning concept for the course
Concentrating on the key levers without getting bogged down in
   complex models
Case study: participants will develop their own deal structure
  for a transaction, drawing on information contained in public documents

Characteristics of debt products
Clear, simple and concise explanation of different debt instruments:
   • Senior debt
   • High-yield debt
   • Mezzanine
   • Payment-in-Kind
Understanding the nature of different financial instruments and risk profiles
Drivers on debt holders
Key considerations for debt holders - keeping finance providers happy
Optimising debt capacity
Short discussion – recent trends in LBO financing
Case study: participants will develop a debt structure for a transaction
  and start to flex the structure within given constraints
 

 DAY TWO
Characteristics of equity products
The nature of equity instruments used in buy out structures
The different risks and rewards accruing to different parties
Key drivers for equity investors
Exits: the good, the bad & the ugly
When things go bad
Recent developments in buyout financing
Exercise: the choices for exit

Detailed equity structuring - deal making with a pocket calculator
The impact of loan stock & preference shares
The impact of mezzanine
Iterating to optimise rewards to key participants
Case study: participants will iterate with a “back of envelope” deal
   structure to optimise returns

Completing the analysis: repaying debt and building value
Modelling a more realistic debt structure for the buy out
Discussion – improving understanding of key debt covenants
Modelling a simple debt facility
Modelling ratios/ covenants
Iterating around value
Rewards to the various parties (institutional equity, management, debt)
Case study: participants will look at work which tests the transaction
  against debt covenants, helping them understand the likely impact
  of key adjustments to assumptions as well as analyse the risks
  and opportunities the transaction will face

Buy out issues
Key documents
Acquisition of the target
Key protections for private equity
What if the business struggles?
How is the decision made to exit?
What if a key manager leaves?
When is a minority stake not a minority stake?
Debt facilities

Summary on deal process and role
The mechanics of the deal process
What is your likely role in the process?
Where can you find deals?
How can you generate the most value?