MSF 705 Master Syllabus

MSF 705: Venture Capital, Private Finance, and Alternative Investments Master Syllabus

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Course Description

The private equity industry has been growing tremendously over the last two decades. While the total amount of private equity capital invested globally was only around $10 billion in 1997, this number reached almost $150 billion as of the end of 2017 and keeps growing. There is still much untapped potential for private equity investments, not only in the U.S. but around the world globally, making private equity a very interesting asset class to study.

The objective of this course is to familiarize students with the private equity industry by providing them with an introduction to the terminology and practices used in private equity transactions by the participants in the industry. Over the next eight weeks, we will be focusing on private equity transactions involving enterprises at different stages of development whose financing needs are answered by private equity companies with different investment focuses. Our main focus is going to be the analytical tools and methods, where we apply common financial valuation models to venture capital and private equity transactions recognizing how financing and valuation change for a firm over its life-cycle.

Our class meetings will mainly consist of case discussions. I will not be lecturing for the most part, so each class member is expected to be well prepared for each session and to actively participate in class discussions. Your participation is vital to making this class a fun learning experience for all of us.

Course Material

Harvard and Darden Business School Publishing cases are the main material for the course. I have created a course pack which can be purchased from HBS publishing directly.

In addition to the cases, I have also included a couple of notes on specific issues, mainly on valuation methods in different private equity settings, in the above mentioned course pack.

There is no required textbook for the course. If you want, I recommend “Metrick and Yasuda, Venture Capital and the Finance of Innovation” as a reference textbook. Additionally, I believe that you would greatly benefit from regular reading of The Wall Street Journal, The Economist, Business Week, Fortune, Forbes, Barron’s etc.

Grading

Your final course grade will be determined as follows:

Participation in Class Discussions	20%
First Case Analysis Presentation/Discussion	20%
Second Case Analysis Presentation/Discussion	20%
First Case Analysis Report	20%
Second Case Analysis Report	20%

You will form groups of 3-4 to work on the case assignments together and submit two written case reports. I will post case assignment questions to provide guidance. A typical case analysis report should include an executive summary, a brief overview of the case, statement of the assumptions made, a detailed financial analysis and recommendations.

Each group will also be required to present/lead a discussion on the two case analyses they work on as I believe presenting a case analysis is a great and effective way of mastering the concepts presented in a case. Every team member must be present on the day of their group presentation/discussion. If you miss the class on your group’s presentation/discussion date, you will not receive credit for the presentation. Please note that the other students are also expected to participate in the case discussion when one group presents/discusses their case analysis.

All case assignment reports must be submitted at the beginning of class on the dates specified. Late submissions will not be accepted. Group case analyses must be original work – see below for academic integrity statement. No credit will be given for unoriginal or copied work and necessary action will be taken based on the honor code.

Lastly, I will not take attendance; however, your attendance and participation are vital – you should actively participate in class discussions if you want to succeed in this class and learn as much as possible.

Tentative Course Outline (Sample)

Week	Topic	Cases/Notes
Week 1	Introduction to Course Organization of Private Equity Firms	Greylock Partners Yale University Investments Office: February 2015
Week 2	Organization of Private Equity Firms GP-LP Relationships	Investure, LLC: Investing in Alternative Assets Oregon Public Employees Retirement Fund: Push and Pull Over GP/LP Compensation
Week 3	Early-Stage Company Valuation Models	Valuing the Early-Stage Company Early-Stage Term Sheets
Week 4	Valuing an Early-Stage Company Term Sheet Valuation	OutReach Networks: First Venture Round* OptiGuard, Inc.: Series A-Round Term Sheet*
Week 5	Late-Stage Company Valuation Models	A Note on Valuation in Private Equity Note on Valuation in Private Equity Settings Valuation of Late-Stage Companies and Buyouts
Week 6	Mezzanine Financing: Growth Rollup Deals	Elephant Bar Restaurant: Mezzanine Financing* AtHomeCare, Inc.: Health Care Services Rollup*
Week 7	Valuation of Late-Stage Deals Leveraged Buyouts	DuPont Corporation: Sale of Performance Coatings Hertz Corporation (A)
Week 8	PE Going Public Review and Class Wrap-Up	The Carlyle Group: IPO of a Publicly Traded Private Equity Firm

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