MBA ELECTIVE OUTLINE: STRATEGY IN PRIVATE EQUITY
Presenter: Troy Dyer
OVERVIEW
Max class size
40 students
Strategy in Private Equity is intended for students who are interested in the role
and application of strategic management in the private equity (PE) industry.
In the context of the investment and asset management industry, private equity
is classified as an alternative asset class that is associated with the opportunity
to make higher returns than listed investments, with a medium-to-long term
investment horizon. In the context of businesses seeking growth capital, private
equity represents a source of funding that usually requires a partnership
approach to business development and corporate strategy.
For the purpose of the course the primary perspective is that of the private
equity fund manager whose role includes managing funds on behalf of limited
partners or institutional investors, and investing in various businesses that meet
the investment mandate. Secondary perspectives include those of the
institutional investors in PE funds as well as the investee companies in which
the PE funds invest. The challenge facing the PE fund manager is to add value
to both investors and investees, and thereby to build wealth for the fund
manager.
Strategic management requires a combination of strategy formulation and
strategy execution. In turn strategy formulation involves the making of choices
given defined goals and scarce resources. The course will examine the range
of strategic choices that need to be made by the private equity fund manager at
each stage in the private equity process: fund raising, investing (comprising preinvestment, investment, and post-investment venture management), and exiting
from investments.
The underlying question that the course seeks to address is: What strategies
are required for the private equity fund manager to produce superior returns on
investment, to meet investor expectations, and to build wealth for the fund
manager?
The setting for the course is the private equity industry on a global basis,
including both developed and emerging markets, with an orientation toward the
local South African market.
AIMS &
OBJECTIVES
The aim of the course is to develop an understanding and a practical grasp of:
- The purpose, functioning and structure of the private equity industry
- The objectives and expectations of the key players in the industry
- The role and application of strategic management in a PE firm
The specific objectives of the course are to develop in students the knowledge,
understanding and skills required to:
- Describe the basic purpose, functioning and structure of the PE industry
- Explain the role and objectives of key players in the PE industry,
namely:
o Investors in PE funds (Limited Partners)
o PE firms (General Partners / fund management firms)
o Investee businesses (businesses in the investment portfolio)
o Government, regulatory bodies and industry associations that
influence and monitor the performance of the PE industry
- Describe and analyze growth trends in the PE industry along various
dimensions, for example PE investment in different geographic markets
and industry sectors
- Describe the objectives of the various stages of the PE process (fund
raising, investment, and exit), explain the analytical frameworks and
tools used at each stage.
-
-
Describe the role of strategic management in a PE firm and analyze the
strategic choices it has to make at the various stages of the PE process,
for example the choices relating to:
o Investment mandate and firm profile
o Source of funds / type of investors
o Investment criteria and selection of investee businesses
o Deal structuring
o Approach to adding value to the overall investment portfolio and
to the individual investee businesses in the portfolio
o Exit strategy for various investments
o Type of resources, capabilities and competitive advantages
Identify and analyze the type of decision-making tensions and conflicts
that arise between a PE firm and its investee businesses, e.g. in terms
of the strategic planning horizon and the choice of exit strategy
Analyze an investment opportunity facing a PE firm and make
recommendations
Identify and analyze the strategic objectives, choices, trade-offs,
challenges and opportunities facing a private equity firm in various
scenarios, and make recommendations to the management of the PE
firm given the goals of meeting investor expectations and building
wealth for the PE fund manager.
FORMAT
The course combines a range of reading materials, teaching formats and
learning approaches, including industry research, case studies and guest
speakers.
METHODS OF
ASSESSMENT
Assessment is based on a combination of:
 Individual class participation
 Individual assignments
 Syndicate case studies
 Syndicate exercise
RESUME
Troy Dyer works as an independent consultant specializing in business and
corporate strategy. He has over 20 years experience as a strategy consultant
and has worked with clients in a broad range of industries, in South Africa,
Europe and the UK. In the last 10 years he has facilitated the strategy
development process for various PE firms and their investee businesses. He
also served as the executive officer of SAVCA, the local industry association for
VC and PE firms, from mid-2004 to mid-2006, where he assisted in developing
strategies for marketing PE as an asset class among institutional investors.
Troy served as a visiting lecturer at Wits Business School in the late 1990s, and
then at GIBS from 2001. He has lectured in the areas of entrepreneurship,
strategy, finance, and private equity. He was selected by SAVCA in 2001 to
design their Foundation Programme for new practitioners in venture capital and
private equity. It was the first programme of its kind in the SA market and is
currently still run at GIBS on an annual basis. In 2011 he served as the director
of an executive programme on venture capital and private equity at Strathmore
Business School in Nairobi, Kenya. It was the first executive programme of its
kind in the East African market.
Troy is a member of CFA South Africa, the Investment Analysts Society of
Southern Africa, and the SA Institute of Chartered Accountants. His academic
and professional qualifications reflect his interest in the areas of business
strategy, finance and investment: B.Com (Wits), B.Acc (Wits), MBA (Wharton),
CA(SA) and CFA Charterholder.