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Private Equity models
What is Private Equity?
Private equity is capital that is not noted public exchange. It is made up of funds that originate from different sources. These can originate from institutional investors or accredited investors, ranging from banks, investment institutions or high net worth individuals, whom provide substantial sums of money for extended periods of time. The aim ultimately being to acquire equity (money) ownership in companies.
A few examples of such firms are: Apollo Global Management, Bain Capital and Blackstone.
Why? The role of such firms is to use that capital to target and purchase established businesses using Private Equity Models, be it private companies or public companies, that will eventually become delisted from public stock exchanges under go-private deals. They then, hope to sell them at a profit in typically, a 4-7 year period.
For a visual representation of this process, have a look at Investopedia’s 2 minute video
How about Risk? Private equity firms are risk averse. The will make low-risk investments, such that the investors can receive a high, yet stable return. For that reason, they will choose firms with a likelihood of increasing share prices in the future, such that the Private Equity firm can make a profit on the investment.
Think of corporations like Burger King, LinkedIn and Taleo Corporation that Bain Capital invested in, and whose services and products are currently being used all over the world.
How do they help? Once the agreement is made, the private equity managers will work along with the management team of the firm to enhance the business’s performance. Many aspects can be targeted such as operation, efficiency savings, cash generation, supply chain management or improving marketing and sales. The result should be an increase in the value of the firm.
Fees? Private Equity firms charge a fee, that typically is composed of a management fee and a performance fee. These fees are first charged to the amount of capital that is raised, which gives an income to the PE firm. But when the business is sold, the firm makes even more income given the performance fee (or carried interest) charged on the profit made due to the rise in market value.
To put it in perspective, a large private equity firm like Apollo Global Management held $188.6 Billion of assets under management in 2016.
If you’d like to know more about fees and regulation done by Private Equity firms have a look at Investopedia's article
Where can I find Private Equity Valuation Excel Models?
For companies considering to analyse a company, specially its valuation, the Eloquens catalogue provides a variety of Private Equity valuation Excel models and templates designed by professionals where all you need is inputs. The Private Equity Excel Models calculate the rest for you. They can be a great source to learn and then build your own.
Most popular models
Saudi Cement Financial ModelThis model shows that you can make a reasonable simple model from the data in TAWDAL452 remove_red_eye
Chapters Model with Leveraged Buyout LBO AnalysisA full financial model to understand the mechanics of an organisation using Valuation, LBO, & Financial Reports573 remove_red_eyefreeby Joshua Wong
All in One Private Equity ModelUsed by Investment Professionals at Private Equity and IB Firms3,722 remove_red_eye$180.00by John Swan
Demo Financial Model (Xero integrated)Integrated and rolling 3 way financial model connected to Xero796 remove_red_eye$25.00by Lance Rubin
Customizable Carried Interest Waterfall Excel TemplateCustomizable and powerful template for carried interest calculations for private equity projects297 remove_red_eye$49.00by Alex Martyanov
LBO Financial Model Excel Template (Illustrative)LBO (Leveraged Buyout) financial model for private companies (clean, simple, functional, and reusable template).215 remove_red_eye$100.00by Karl Schopf
Bridge between Equity value and Enterprise value - Illustration ModelThis Excel model illustrates bridge between equity value and enterprise value.50 remove_red_eye
Ratio Analysis, Financial Ratio Analysis in ExcelLearn all you need to know about ratio analysis, using a manufacturing firm as a case study.39 remove_red_eyefreeby Finance Walk
Discounted Cash Flow (DCF) ModelA step by step Discounted Cash Flow Analysis Tutorial (DCF model)16,315 remove_red_eye
CEQ Method Valuation ModelValuation by the CEQ Method based on Discrete Scenario Cash Flow Forecast1,190 remove_red_eyefreeby Kevin Hanley
Leveraged Buyout LBO ModelA fully customizable excel LBO model to assess the debt level your firm can take in a deal & expected investor returns3,015 remove_red_eye
Mongolia Mining Case ModelA Credit Analysis Model with Variation from Commodity Prices and Evaluation of Downside Case Variables335 remove_red_eye
Discounted Cash Flow Model TemplateA fully customizable excel model to match your needs, and use as a starting point or as a full DCF tool for valuation.8,361 remove_red_eye
IRR Analysis Excel Model: Years Invested vs. Return MultipleExcel template for constructing an IRR analysis to manage rate of return for each investment.800 remove_red_eye
Quarterly Leveraged Buyout LBO ModelAn LBO model illustrating a number of detailed analytical techniques to construct an acquisition LBO model with history758 remove_red_eye
LBO Model - Company Valuation ToolAn LBO Model to learn how to Value all types of Businesses Like a Private Equity Professional1,732 remove_red_eyefreeby Jon Taylor
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