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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.
- Customizable and powerful template for carried interest calculations for private equity projects456 remove_red_eye$49.00by Alex Martyanov
Convertible / Promissory Note Returns Excel CalculatorCalculate the different scenarios for a convertible / promissory note and the outcomes for the investor / issuer56 remove_red_eye
Synergy Valuation Premium DCF Excel ModelA Premium Discounted Cash Flow DCF Model including synergy valuation765 remove_red_eye
Bridge between Equity value and Enterprise value - Illustration ModelThis Excel model illustrates bridge between equity value and enterprise value.76 remove_red_eye
All in One Private Equity ModelUsed by Investment Professionals at Private Equity and IB Firms3,953 remove_red_eye$180.00by John Swan
Discounted Cash Flow (DCF) ModelA step by step Discounted Cash Flow Analysis Tutorial (DCF model)18,554 remove_red_eye
LBO Financial Model Template (Detailed)LBO (Leveraged Buyout) financial model for private companies (clean, simple, functional, and reusable template).352 remove_red_eye$300.00by Karl Schopf
Ratio Analysis, Financial Ratio Analysis in ExcelLearn all you need to know about ratio analysis, using a manufacturing firm as a case study.64 remove_red_eyefreeby Finance Walk
How To Estimate The Equity Risk Premium For a CompanyThis video analyses and explains the process behind estimating Equity Risk Premiums for individual companies.14 remove_red_eye
How To Estimate The Cost of Capital and Equity for a Privately Owned BusinessAn overview of how to estimate the cost of capital and equity for a privately owned business.15 remove_red_eye
How To Estimate The Cost of Capital For a Firm, Division or ProjectThis video demonstrates how to estimate the cost of capital using Sri Lankan hotel company Aitkin Spence as an example.10 remove_red_eye
LBO Financial Model Excel Template (Illustrative)LBO (Leveraged Buyout) financial model for private companies (clean, simple, functional, and reusable template).267 remove_red_eye$100.00by Karl Schopf
Equity Valuation: How to Calculate the Growth Rate and Discount RateProf. David Hillier talks you through the dividend growth model and how to calculate the growth rate and discount rate.17 remove_red_eyefreeby David Hillier
Value of Control in a Firm - Excel ModelThis Excel model analyzes the value of control in a firm.1,334 remove_red_eye
How to Evaluate Private Equity Investments by Using CriteriaThis guide provides the criteria used to evaluate whether an investment opportunity is a good one.38 remove_red_eye
How to Prepare for a Private Equity InterviewThis guide provides useful tips, along with sample questions that will help you succeed in private equity interviews.13 remove_red_eye
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