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 Models?
For companies considering to analyse a company, specially its valuation, the Eloquens catalogue provides a variety of Private Equity valuation models and templates in excel designed by professionals where all you need is inputs. The Private Equity models calculate the rest for you. They can be a great source to learn and then build your own.
- This LBO model in excel analyzes the value of equity and the firm in a leveraged buyout operation.574 remove_red_eyefreeby Prof. Aswath Damodaran
Value of Control in a FirmThis model analyzes the value of control in a firm.369 remove_red_eyefreeby Prof. Aswath Damodaran
Leveraged Buyout Analysis LBO ModelA step by step LBO analysis tutorial and LBO model excel template1,817 remove_red_eyefreeby Business-Valuation.net
All in One Private Equity ModelUsed by Investment Professionals at Private Equity and IB Firms917 remove_red_eye$180.00by John Swan
Leveraged Buyout LBO Model - DCFA comprehensive LBO model in excel of business acquisition398 remove_red_eyefreeby Amit Tandon
Leveraged Buyout LBO Model TemplateA full Leveraged Buyout LBO model template for a project to understand its different components and work with your own.564 remove_red_eye
Comparable Company AnalysisArrive at the right multiple (EV/Sales, P/E etc.) to prepare the comparable comps.121 remove_red_eye
Private Equity Band Chart TemplateCompute the Price to Earnings (or other PE ratios) Band Chart for your target stock or index132 remove_red_eye
RADR Method Valuation ModelValuation by the RADR Method based on Discrete Scenario Cash Flow Forecast303 remove_red_eye
CEQ Method Valuation ModelValuation by the CEQ Method based on Discrete Scenario Cash Flow Forecast330 remove_red_eye
Chapters Model with Leveraged Buyout LBO AnalysisA full financial model to understand the mechanics of an organisation using Valuation, LBO, & Financial Reports123 remove_red_eyefreeby Joshua Wong
Combination ModelA 22 section excel model to assess the impact on the financials of the combination of companies147 remove_red_eye
movieQuarterly Leveraged Buyout LBO ModelAn LBO model illustrating a number of detailed analytical techniques to construct an acquisition LBO model with history134 remove_red_eye
movieSaudi Cement Financial ModelThis model shows that you can make a reasonable simple model from the data in TAWDAL61 remove_red_eye
movieMongolia Mining Case ModelA Credit Analysis Model with Variation from Commodity Prices and Evaluation of Downside Case Variables57 remove_red_eye
movieSolar Annual ModelThe file uses a simple project finance model to illustrate programming associate with a flip structure64 remove_red_eye
movieLBO Model - Company Valuation ToolAn LBO Model to learn how to Value all types of Businesses Like a Private Equity Professional324 remove_red_eyefreeby Jon Taylor
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.425 remove_red_eye
Leveraged Buyout LBO ModelA fully customizable excel LBO model to assess the debt level your firm can take in a deal & expected investor returns331 remove_red_eye
movieDemo Financial Model (Xero integrated)Integrated and rolling 3 way financial model connected to Xero274 remove_red_eyefreeby Lance Rubin
- Your Private Equity Excel Model
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