Business Background
Our client is a private equity firm focused on the high-growth UK and Northern European SMEs valued at between £10m and £200m.

Business Problem
The client needed to sharpen the finance and modelling skills of their recent lateral hires, who had joined the firm from a legal or consulting background.

Solution
We developed a bespoke two-day course to equip recent joiners with core financial analysis and modelling skills required for private equity transactions and fund structures. The course covered:

• A ‘Short Form’ model of income statement and operating cash flow to estimate indicative returns across an investment period, suitable for screening potential deals
• A ‘Long Form’ model which fully integrated a ‘NewCo’ acquirer with the target ‘OpCo’ and incorporated multiple debt and equity capital components
• Modeling a debt waterfall, with mandatory and accelerated debt repayments as well as equity distributions subject to covenant thresholds
• Analysis of locked box vs completion account mechanisms and their impact on equity offer value and enterprise value
• Analysis of limited vs general partner returns with/without a catch-up above the minimum hurdle rate
• Modeling management incentive structures using ratchets and  sweet equity participation
• Analysis of the components of equity value creation and construction of a value bridge chart
• Incorporating scenarios and sensitivity analysis around the base case to establish the range of potential returns

Business Results
Incorporating case studies into course material was crucial as it provided real-world examples to reinforce concepts learnt during training sessions. Participants gained a comprehensive set of financial and modelling skills to complement their existing non-financial areas of expertise. The models developed in class were subsequently used by the client to screen potential opportunities more effectively.