Private equity funds are often called grasshoppers or corporate raiders. Are these accusations true? Are financial investors who generally acquire non-listed companies and sell them after a few years for as much profit as possible really value destroying? In order to answer these and other questions, it is important to understand the business model of private equity funds. The aim of this book is to convey this understanding. The business model of private equity funds has been explained comprehensively and lively. Furthermore, questions like the following will be discussed: What does a private equity fund earn when selling a portfolio company? What do the investors who provide the capital earn? In the beginning, the historical developments of private equity are explained. Next, there is a comprehensive, lively, and practical explanation of the business model of private equity based on the individual stages of a private equity fund's lifecycle. All stages will be discussed, from the fundraising to the value creation methods to the successful sale of the portfolio company (exit). Later in the book, the leverage buyout valuation (LBO) model, which is used by private equity funds, is explained using a practical case study. After reviewing the case study, readers on their own should be able to build an LBO model using the main functions.
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About the Author
Daniel Burmester is a best-selling author in Germany. In 2016, he published the first version of the private equity book. He is currently working as a consultant in a global strategy consulting firm where he consults large banks and other financial institutions. He has worked and studied in five different countries. His work stations have included an international private equity fund of funds, the mergers & acquisitions departments of investment banks, and a role in one of the "Big Four" accounting firms. He has consulted private equity funds of different sizes and in different geographies. Furthermore, he has published articles in an international magazine about company valuations. Daniel holds a double master's degree in international finance and financial economics.