Year 3 · Applied Finance · Private Equity
Private Equity
Understand how private equity investors source, evaluate, finance, own and exit companies, with a focus on leveraged buyouts, investment committee logic, value creation and return analysis.
LEARNING OBJECTIVES
What you should be able to explain after this lesson
01
Explain the private equity business model and fund structure.
02
Understand deal sourcing, diligence and investment committee decision-making.
03
Build the logic of a basic leveraged buyout.
04
Analyze debt capacity, cash generation and deleveraging.
05
Identify operational, strategic and financial value-creation levers.
06
Calculate and interpret MOIC and IRR under different exit scenarios.
CONCEPT MAPFrom deal sourcing to exit
Private equity buys control, improves businesses and exits for a return
CORE FACTS · SAME IN EVERY MODE
Private equity funds raise capital from limited partners and invest it through a general partner.
Buyout funds typically acquire controlling stakes in established companies.
Returns depend on entry price, operating performance, leverage, cash generation and exit value.
Private ownership allows concentrated governance and long-term operational intervention.
BeginnerTeaching style changes, knowledge does not.
A private equity fund buys a company using a mix of investor equity and debt, improves the business over several years, then sells it. The goal is to make the equity investment worth much more at exit.
PROFESSIONAL VOCABULARYGP / General Partner LP / Limited Partner Control investment / investissement de contrôle
Fund manager responsible for sourcing, investing and managing the portfolio.
Investor providing capital to a private equity fund.
Investment giving the buyer effective decision-making control over the company.