7 DEVELOPED FOR LIMITED PARTNERS BY LIMITED PARTNERS KEY LEARNING OUTCOMES • Articulate how private equity investing fits as part of an asset allocation model: explain the benefits and costs (risks) of investing in the asset class. • Explain how different sub-classes of private equity behave differently/similarly in a private equity portfolio and portfolio construction techniques. • Describe the historical and expected returns of private equity and its sub-classes. • Apply different methods of measuring private equity returns and describe benchmarking techniques. • Construct a quantitative and qualitative private equity due diligence plan. • Describe the different fund reporting standards with UK GAAP, IFRS and US GAAP. • Demonstrate how to analyze different sections within standard private equity reports to monitor performance and/or activity of a private equity fund. • Describe typical fund structures and important aspects to consider in regard to private equity investing. • Identify key terms and conditions in limited partnership agreements and other documents. • Describe the conflicts of interest that a general partner may face as an investor, service provider, administrator of a private equity fund and how this may also create principal/agent conflicts between the general partner and the limited partners. • Describe general differences that may exist between partnerships or entities governed by the laws of Delaware, the Cayman Islands, Guernsey and other jurisdictions. • Describe the illiquidity risk associated with a private equity portfolio and the impact on a broader investment portfolio. • Describe different methods of measuring private equity risk at the private equity fund level and as part of a broader investment portfolio level. • Describe different valuation techniques that direct investors (e.g., general partners) may use to analyze a potential investment and identify key considerations and factors related to one or more private equity sub-class (e.g., venture capital and buyout transactions). • Articulate how limited partners can use the valuation techniques and templates as part of their own investment process, from due diligence to secondaries to co-investments. COURSE OUTLINE PRIVATE EQUITY OVERVIEW • Equity and debt capital markets • Evolution and classes of PE EVALUATING A PRIVATE EQUITY FUND AND FUNDRAISING • Available tools/benchmarking/returns modeling • Qualitative and quantitative due diligence INVESTING IN LIMITED PARTNERSHIPS • Key economic considerations • Compensation incentives in LPAs • Implications of different fees and terms on the net returns to LPs FUND STRUCTURE, GOVERNANCE,AND LPAs • Governing documents • Delaware/other regulatory considerations • Non-Delaware/non US-considerations • Key terms PRIVATE EQUITY REPORTING AND ACCOUNTING • Reports from the general partner • The audit • Accounting standards • Valuation guidelines • Reconciling financial statements PRIVATE EQUITYAND RISK • Diversification and multiple sources of risk • Historical returns • Measures of risk and return • The impact of limited liquidity on portfolio design DUE DILIGENCE AND VALUATION • Valuation and monitoring • How to access the economics and evaluate the profit formula • Valuation techniques • Designing the appropriate securities and financing strategy • When should the general partner exit LEVEL I