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Case Studies by Claudia Zeisberger

31 case studies

by Publication Date
published: 25 May 2011

  • Topic: Entrepreneurship
  • Region: Global

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Abstract:
The topic of valuation and measurement of return (i.e. investment success) permeates the whole life cycle of private equity (PE). While the valuation part is in many ways similar to other direct investment strategies, the measuring of returns in private equity is a notoriously difficult business, mainly due to the absence of an efficient and transparent market for the asset class. So while theoretically not difficult, the wide range of practical approaches – often designed to produce a specific outcome – tend to be confusing to an outsider or new student of the field. This paper does not attempt to systematically explore all the variations that exist in the market but rather to give an overview of the most common approaches, highlighting their strengths and weaknesses and pointing to major alternative methods.

Pedagogical Objectives:
see abstract

Keywords:
Private Equity, Valuation Issues, Return Measurements, Portfolio Companies, Acquisition Targets, Iaf Gpei, Corporate Governance, Investors, Stakeholders and Accountability, Investors, Stakeholders and Accountability, Gpei, Gpei-Case

published: 26 Jul 2010

  • Topic: Entrepreneurship
  • Industry: Private Equity and Family Offices
  • Region: Global

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Abstract:
A European multi-family office is weighing whether and how to invest in Asian private equity. Part A moves from a discussion of the historical and current state of Asian private equity to the outlook and risks associated with such an investment. It also starts a discussion of returns on Asian private equity and whether they adequately compensate for the risks identified earlier. Part B deals with implementation questions on how to execute an investment strategy in this market from an asset manager perspective. It follows up on the returns discussion from Part A, focussing on the top performing funds and how to identify and access them.

Pedagogical Objectives:
1.To get an overview of the Asian private equity landscape in respect of its development, size and growth prospects 2.To understand private equity as an asset class a.with regard to the relationship between LPs and GPs b.with regard to opportunities/risks and returns c.To discuss similarities and differences between PE in Asia and developed markets and what they mean for expectations of returns.

Keywords:
Private Equity Returns in Asia, Lps and Gps, Investing in Emerging Markets, Growth Drivers in Asian Pe, Target Returns in Private Equity, Private Equity in Emerging Markets, Risk-Adjusted Returns in Emerging Markets, Gpei, Gpei-Case

published: 28 Jun 2010

  • Topic: Economics & Finance
  • Industry: Industry and Finance
  • Region: Global

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Abstract:
Attempting to classify, rank and understand the different types of risk we face in our businesses, investments and in day to day life is not easy. Degrees of magnitude are difficult to sort if outcomes are non-linear, subject to crowd valuation and part of complex systems. We need a broad framework to understand risk and a roadmap to guide us when we get lost.

Pedagogical Objectives:
It is safe to assume that all MBA students will face risk management responsibilities at one point in their career. Every decision involving growth and the pursuit of a better life (for yourself or others) involves risk. The broad framework of risk presented here, with four major classifications, will not only help with case studies in class, but also offer guidance for future risk management challenges.

Keywords:
Risk Management, Resilience and Redundancy, Risk Management Tools, Types of Risk, Four Quadrants, Coconut Uncertainty, Complexity, Fat Tails, Corporate Governance, Auditing, Risk Control and Performance

published: 25 May 2010

  • Topic: Entrepreneurship
  • Region: Global

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Abstract:
Ever since author Nassim Taleb introduced Black Swans into our lexicon and after the devastating financial events of 2007 and 2008 supported his thesis, Corporate Risk Departments, Hedge Funds and Individuals have been searching far and wide in a Don Quixote-esque hunt for the elusive bird. But most Black Swans are just Dirty White ones. They catch us by surprise, but shouldn’t. This is due to our human bias to dismiss obvious evidence, restrict historic observation to our personal set of life experiences and refrain from hedging an identified risk believing that it probably won’t occur. This article defines six simple techniques that can help protect your business from Black Swans, from an extreme event that might take you out of business.

Pedagogical Objectives:
The purpose is to set the scene for a risk management discussion that goes beyond the off-hand excuse from risk managers when they point to "unexpected events" . Students will realise that most of what we call Black Swans, unpredictable events with massive consequences, are in reality just Dirty White Swans; entirely plausible and hedgeable events if you study history, perform basic due diligence, employ value-based hedging and listen to those highlighting dangers.

Keywords:
Risk Management, Black Swans/ Fat Tails, Eccentric, Extreme Events, Business Continuity, Value-Based Risk Management, Calling a Spade a Spade, Hedging

published: 25 Jan 2010

  • Topic: Entrepreneurship
  • Industry: Alcoholic Beverages
  • Region: Asia

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Abstract:
The case focuses on the risks and rewards of early-stage investing in a successful emerging market consumer start-up (i.e. non-tech), from seed funding in 2004 to raising expansion capital in 2019. We observe the founder of Sula Vineyards, a winemaker from the Nasik Valley in India, as he makes decisions about external fundraising. Case (A) takes the seed investor perspective. It follows Deepak Shahdadpuri, who stays invested in Sula for 13 years, gradually reducing his equity stake along the way. Cases (B) and (C) follow the company as it raises successively larger rounds of funding to fuel its growth and international expansion. As the Sula brand and CEO Rajeev Samant become increasingly well-known, the company attracts the attention of diverse investors ranging from European family offices, Asian institutional investors, venture capital and growth equity, and sovereign wealth funds. Given its emerging market setting, the case can be used to explore investment risks from political and regulatory uncertainty, and currency risk for US$-based institutional investors.

Pedagogical Objectives:
Students have a chance to observe a fast-growing business’s financing needs through the eyes of the investor (at seed and follow-on stage) and the founding entrepreneur. They are asked to make decisions about partnerships, understand the nuances between investor types (financial, strategic, sovereign, family office) and the technicalities of valuation. Macroeconomic risks, governance, shared responsibility, active/passive investor experience, and conflicting investor interests are also discussed.
• Case A: Sula as an early-stage investment opportunity; the valuation exercise and risk assessment from a seed investor’s point of view covering product risk and founder’s risk.
• Case B: Sula at growth stage; raising a subsequent round to scale up; market risk and implementation risk; the entrepreneur’s choice of subsequent partners after the exit of seed investors.
• Case C: Sula at a later stage; the founder deciding whether to keep the company private or take it public, and the potential impact on governance of transferring a majority stake to a single investor.

Keywords:
Wines, Alcoholic Beverages, Venture Capital, Vc, Growth Equity, Growth Capital, India, Private Equity, Startups, Seed Funding, Entrepreneurs / Entrepreneurship, Emerging Markets, Consumer Startups, Family Office, Investment Exits, Co-Investments, Risk Management, Adec, Gpei, Gpei-Case

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published: 18 Dec 2009

  • Topic: Economics & Finance
  • Industry: Venture Capital, Telecommunications
  • Region: Europe

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Abstract:
Bredbandsbolaget is a broadband provider that started in the midst of the dot-com bubble in the late 90s. With very high capital expenditure requirements and having struggled to meet its business plan objectives in previous years, its majority investors are now faced with the dilemma of whether to extend further funding, and, if so, how to circumvent anti-dilution provisions that lie in the way of diluting co-investors that can not match them pro-rata.

Pedagogical Objectives:
The case presents a late stage, multi-round venture investment and the accompanying opportunities and problems that shareholder turbulence can engender. The objective is to provide a basic understanding of the problems, questions and deliverables typical in a multi-round VC investment by posing questions at a medium-to-high level of difficulty. Key learnings include: - Investment attractiveness and risk assessment - Portfolio fit and the investment horizon - Investment valuation based on DCF and comparable multiples - Term sheet structuring and anti-dilution provisioning

Keywords:
Venture Capital, Investor Growth Capital, Late Stage Investing, Exit Strategy, Bredbandsbolaget, Term Sheet, Anti Dilution Provisions, Valuation, Broadband, Add-On Acquisition, Acquisition Synergies, Opportunity Cost of Investment, Minority Shareholder Issues, Pro-Rata, Ntl, Gpei, Gpei-Case

published: 18 Dec 2009

  • Topic: Economics & Finance
  • Industry: Venture Capital, Utilities
  • Region: Europe

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Abstract:
Direct Energie is a highly successful start-up in the French electricity distribution industry, providing electricity to SMEs. Due to its rapid expansion, the company is looking to raise additional funds, weighing its options whether to do so simply in France or also in the UK. NBGI Ventures, which has a chance to make such an investment, now needs to assess the opportunities and risks involved, and from this formulate a term sheet and a valuation to present to Direct Energie.

Pedagogical Objectives:
The case frames the venture investment opportunity and the accompanying items - term sheet and PPM - as presented to the VC fund. The objective is to provide a basic understanding of the problems, questions and deliverables typical in a VC investment. It can be used for self study and in-class teaching. By putting the student in the VC?s position and making references to term sheet vocabulary and structure, students can proceed at a pace and depth they are comfortable with. If used for self study, the solution material (TN) should be made available to students.

Keywords:
Venture Capital, Nbgi Ventures, Early Stage Investing, Exit Strategy, Direct Energie, Term Sheet, Electricity Provider, Valuation, Edf, Oil Price Sensitivity, Electricity Spot Prices, Benefit of International Investor, Negotiations with Founders, Pro-Rata, Gpei, Gpei-Case

published: 30 Nov 2009

  • Topic: Entrepreneurship
  • Industry: Private Equity
  • Region: Asia

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Abstract:
This case examines issues faced in closing a first-time private equity fund, including determining the size of the fund to raise, integrating principals who have never worked together, and marketing a first-time fund to potential limited partners.

Pedagogical Objectives:
This case aims to introduce participants to the following issues: different approaches when calculating desired total private equity investment fund size; team building for a first-time fund; securing an anchor investor; marketing the fund to subsequent investors; and achieving the first and subsequent closes for the fund.

Keywords:
Private Equity, Fundraising, General Partner, Limited Partner, Evolvence, Life Sciences, India, Growth Investing, Adec, Gpei, Gpei-Case

published: 15 Sep 2009

  • Topic: Entrepreneurship
  • Industry: Turnaround in Transportation/ Railways
  • Region: Asia

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Abstract:
The case describes the transformation of Indian Railways, the world's largest employer with over 1.4 million employees, from near-bankruptcy to a profitable and viable business. We follow Sudhir Kumar, Officer on Special Duty to the Minister of Railways, as he deals with the various constituencies in this highly successful turnaround of a government-run institution.

Pedagogical Objectives:
- Highlight the importance of managing stakeholders in a turnaround process - Delivering results in a highly political environment

Keywords:
Turnaround and Transformation in Corporations, Negotiating with Stakeholders, Managing Stakeholders in a Turnaround Situation, Financial Distress, Gpei, Gpei-Case

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published: 30 Jun 2009

  • Topic: Strategy
  • Industry: Banking & Financial Services
  • Region: Global

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Abstract:
The case is set in the financial services industry during the financial crisis of 2008/09 and discusses issues when deciding on "fair" compensation packages for both senior management as well as risk managers. How can banks justify multimillion dollar bonuses to top management, when the institution is showing a loss/accepting government money to survive? Can compensation packages be competitive and please both employees and shareholders at different stages of the cycle? The case highlights the industry's soul-searching and attempts to appease an outraged public and manage possible future stress situations better.

Pedagogical Objectives:
- Set the stage to discuss compensation practices within the financial industry. - Understanding the risks (and un-intended consequences) when designing compensation packages to encourage/discourage risk taking. - Highlight the issues when trying to satisfy different stakeholders within listed companies.

Keywords:
Risk Management, Bonus and Incentive Payments, Best Practices in Compensation Packages, Incentivizing Employees, Aligning Shareholder Value with Company Interests, Regulatory Involvement in Banks, Incentivizing Risk Managers, Corporate Governance, Board Process and Remuneration at the Top

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