Course Outline: Private Equity -- Competing In An Efficient Market Peter Weinbach peter.weinbach@yankeehillcapital.

com telephone: (203) 895 2519 Over the past two decades, the private equity industry has matured. There are 1,000+ firms and hundreds of billion of capital available and ready to be deployed. Most companies are sold through auctions with deliberate, thorough sale processes. Arguably the market is efficient and companies are sold for full value. This course will focus on competing in an efficient market and the key drivers for success. The course will be broken down into the following sections: i) establishing a focus; ii) identifying opportunities; iii) creating value through strategic and operational improvements; iv) investing in and adapting to changing environments; v) concluding remarksmaking money in a mature market. This will be an elective course with a requirement that all students have completed their core studies including accounting, corporate finance, strategy and marketing. Students will be required to come to class prepared to summarize, discuss and debate course topics. Selective reading materials, case studies and group project will be utilized. Grades will be based upon class the following: i) class participation (weighted 1/3) where must come prepared to summarize, discuss and debate course topics; ii) submission of answer for 2 written case studies Dresser division buyout and Texas Pacific Group and J. Crew cases (weighted 1/3); iii) and group project where students will be divided into groups of 5 to 6 students and will put together and present to the class a 20 minute overview of an investment opportunity (a public to private transaction where students will identify a public company that merits take over consideration) (weighted 1/3).

Textbook: International Private Equity, Eli Talmor and Florin Vasvari, Wiley
2011

Outline:
I. Establishing A Focus -geographic focus -generalist vs. industry specialist -acquisition target size

The emphasis will be on crafting a viable strategy in a competitive market Case Studies: -The Carlyle GroupHBS 409050 (industry focus and culture, structure and investment philosophy) Text book: Background Material Part 1, chapters 1, 2 and 5

II.

Identifying OpportunitiesFrame Work - understanding attributes of successful leverage buyout - assessing merits and de merits of opportunities - honing in on key drivers of return and risk Two concepts will be discussed and analyzedgeneral characteristics of a potential buyout; and within the context of a deal, the key drivers of risk and return Case Studies: - Dresser Division (buyout)HBS 207125 (characteristics of attractive buyout, assess achievability of forecasts and valuing company) Textbook: Background Material Part 2, chapters 10, 11, 12, 13, 14 and 15 Textbook: Case Study Part 4, chapter 21- Bloomsbury Capital- June 2007

III.

Identifying OpportunitiesApplication of Framework - developing acquisition criteria - identify acquisition opportunities in public markets This is an exercise that will allow students to move from the theoretical to the practical. In groups they will attempt to identify live opportunities and come prepared to defend their ideas -AMC case is provided as background information to assist students in their group project

Group Assignment: - class will be divided into groups and required to develop acquisition criteria, identify acquisition opportunities in public markets and assess key drivers of return and risk in a transaction -size and growth of addressable markets, products and competition, source and sustainability of competitive advantage, valuation and key drivers of returns and risks, among other factors should be evaluated - each group will make a presentation to the class and should be prepared to defend their ideas Case Studies: - Buyout of AMC EntertainmentDardenUVA-F-1508 (forming a public to private proposal) Textbook: Case Study Part 4, chapter 25- Ducati and Investindustrial IV. Creating Value through Strategic & Operational Improvement - operational assessments & correcting inefficiencies to create value - strategic reviews and durable advantage - blue print for valuedefined action plans Arguably the core of the current private equity business is building and improving businesses which will be the focus of this module Reading Materials: - Value Acceleration: Lessons from Private Equity MastersHBS R0206F (investment thesis, zero on keys, manage balance sheet) - If Private Equity Sized Up Your BusinessHBS R0711D Case Studies: - Texas Pacific Group & J. CrewHBS 808017 (TPGs intensive involvement in running the business) Guest Lecturer: - CEO Update, Inc. (Update Legal) $100M revenue legal staffing company owned by Gryphon Investors ($1B under management private equity group)--- Topics to be covered: Summary of transaction, investment thesis, key operational and strategic focuses and involvement of private equity sponsor in the process

V.

Investing in and Adapting to Changing Environments - understanding and projecting industry structure 3 to 5 years hence - opportunities and risks in consolidating industries - evaluating under vs over built industries and potential competitive encroachment - understand changing nature of market opportunities The purpose of this module to understand the mindset and strategic outlook of long term investors -Linen n Things case will highlight changing competitive landscape and entrants of new competitors Case Studies: -Linen n Things vs. Bed Bath & BeyondHBS 909MG1 (business and environmental strategycentralization vs. de centralization and competitive encroachment by Target & Walmart)

Guest Lecturer: - Consultant: David Browneformer Partner of Accenture with consumer/ retail expertise and focus on strategy and change management - Topics to be covered: Discussion of investing and managing in markets undergoing change VI. Concluding Remarks: Making Money In A Mature Market -industry specialization -focus on improving companies -monitor, measure and adapt -track market conditions and manage exits The first part of this class will be reserved for spill over from previous classes; and the second part will attempt to distill down the important concepts and takeaways from the course