The Private Equity Toolkit. Tamara Sakovska

guidelines for an investment target post-acquisition, managing an investment in distress or preparing a portfolio business for exit—as these situations arise less frequently within the lifecycle of a typical private equity investment. Given these challenges, it takes multiple years for anyone to become truly skilled across all the main aspects of the private equity profession.

My experience was no different when I started my own private equity career a few decades ago. There was no practical handbook that could walk me through the key principles of private equity investing. I had to learn on the job and am grateful to all my senior colleagues who generously shared their knowledge with me. During my formative years as an investment professional, I thought it might be a good idea to start collecting various strategies and checklists that I came across on various transactions in order to create a single sourcebook to support me in my day-to-day work. Over the years, I incorporated a number of additional useful concepts that I discovered by reading books written by experts operating in adjacent business fields, such as mergers and acquisitions, value investing, equity research, behavioral finance, strategy, sales and marketing, business operations, restructuring, organizational behavior and corporate governance.

      It took me a number of years to test the multifarious concepts in my “home-made” private equity primer on real-life transactions and transform them into a series of simple, actionable frameworks to underpin key decision-making principles that—in my opinion—apply best to each phase of a private equity investment, from sourcing to exit. This extensive compilation of ideas and multidisciplinary best practices formed the basis of my personal toolkit that I could turn to every time I needed inspiration or wanted to expand my professional repertoire. These proven techniques, together with the key lessons I learned during my own investment career, represent the core of The Private Equity Toolkit.

      Remarkably, to this day, there is still no single finance book that can adequately fulfill the role of a practical “how-to” guide for the private equity industry. Even though there have been many useful private equity titles published in the last 10 years, you will quickly see that they are either academic textbooks that focus on theoretical principles, or private equity “war stories” that highlight prominent transactions in the industry. So far, not many private equity deal practitioners have taken the time to step out of the deal frenzy and write a practical reference guide capturing the industry's best practices across the private equity deal lifecycle. The Private Equity Toolkit intends to fill this gap and become the industry's missing manual.

The incessant growth of the private equity industry has created increased demand from curious professionals—such as yourself—who seek to embark on an investment career and look to acquire practical knowledge of the main skills required by the private equity profession. The Private Equity Toolkit will serve as a helpful guide for business school students, investment banking and consulting practitioners exploring a private equity career, as well as private equity professionals who are just starting their journey. Even though I assume that you possess a basic background in corporate finance and accounting, I made a deliberate effort to make this book as accessible as possible to a wide audience of readers by presenting the content in plain English, skipping graphs and equations and suggesting additional resources as I step through the chapters. While The Private Equity Toolkit primarily reflects my own subjective investment experience and utilizes stacks of personal notes, it is not entirely devoid of academic rigor. In fact, in preparing this book, I have performed extensive research of each topic across both the relevant academic literature and scholarly research in order to capture the most prominent findings and incorporate what I considered to be pragmatic, actionable advice.

      Still not convinced? The chapter-by-chapter outline at the end of this section provides more insight into how you might be able to enhance your existing knowledge and optimize your own approach to private equity deal execution, from sourcing to exit. Use The Private Equity Toolkit as a reference guide and feel free to jump directly to the most relevant chapter whenever you require targeted support during a particular phase of a private equity investment. Once you've taken a look at the overall book structure, let's delve into the critical components of every deal that will make up your own private equity toolkit.

       Disclaimer

      While this book discusses at length my own approach to making decisions at every phase of the private equity transaction lifecycle, I am not offering any investment, legal or tax advice.

       How to Get in Touch

      If you have comments or suggestions, why not share them with me so that I can incorporate your thoughts in the next edition of this book? I welcome your contributions and feedback. Thank you! Please email me at: [email protected]

Chapter 1: First Thoughts on Deal Sourcing

      Key Topics:

       Why deal sourcing remains an obscure field

       Six action steps to take today to enhance your deal origination prowess

       Proven deal sourcing strategies and the search for the mythical proprietary deal

       How to assess your current deal sourcing capabilities

       Key trends to look for now to spot future private equity deals ahead of others

Chapter 2: Thematic Deal Sourcing

      Key Topics:

       Take the mystique out of thematic deal sourcing with the ICEBERG Roadmap™

       An effective way of breaking down your deal search into simple, executable steps

       How you can systematically generate promising investment themes

       Best practices for mapping out an industry, finding deals and meeting sector experts

       A time-tested strategy for approaching companies directly

       How to make the most out of your first meeting with a deal target

Chapter 3: Opportunistic Deal Sourcing

      Key Topics:

       Develop an edge in opportunistic deal sourcing with the DATABASE Roadmap™

       No luck required: why having a clear focus pays off in an opportunistic deal search

       Actions you can take now to get the most out of your professional network

       How active brand management can help your fund stay top of mind

       Creative ways to supplement your opportunistic deal ideas

       How to manage your deal origination workflows effectively and effortlessly

       Does a dedicated business development function work for everyone?

Chapter 4: Deal Selection: Eliminating the Wrong Deal

      Key Topics:

       Why killing deals is as important as doing deals

       How skilled investors overcome biases and minimize investment errors

       Why the best investment of your career might be a deal you never pursue

       Nine deal breakers you need to check for before proceeding on any deal

Chapter 5: Deal Selection: Identifying the Right Deal

      Key Topics:

       Save time and effort: why it makes sense to evaluate the transaction dynamic first

       If