Customer Reviews

Venture Capital and Private Equity: A Casebook

5 star:		(9)
4 star:		(3)
3 star:		(3)
2 star:		(2)
1 star:		(0)

 

 

Over the past few years the institutional private equity market has exploded. Riding on the backs phenomenal public markets and a wave of technological innovation, private equity in general and venture capital has become one of the most sought after investments.

However, given the rash of recent publicity, stellar performance, and a balooning assets, there's surprisingly little research available about the institutional private equity market. Profs. Lerner and Gompers currently account for probably half of all academic research in this market.

The institutional private equity market is quite different from angel investments. The majority of the capital at the institutional level flows from large investment institutions like public pensions, endowments and insurance companies. Moreover, the personal investing into private companies do so professionally.

More than anything, the book serves as a primer to the institutional private equity market.

The book was intitially meant for HBS and other MBA students. Thus, almost all the content is in case study form. In a lot of respects this is advantageous. In general, a book either has the option of being a primer or providing high level analysis on a very specific topic. Clearly this book is the former. In my opinion, the downfall of most primers are the oversimplification of topics and useless generalizations. Given the early stages of the institutional private equity market, generalizations are especially questionable and difficult. On the other hand, the case method presents users with numerous situations and predicaments facing the participants. As a result, readers gain an understanding of the issues facing this market from a number of perspectives.

This books provides useful information on key topics such as investing and analyzing private equity funds from an institution's perspective, fund of funds, forming a private equity fund, and the direct investments into companies by the private equity funds, along with many other topics. Whatever level the private equity professional is functioning, understanding each of these components I imagine is key.

This casebook provides an very good overview of the institutional private equity market. Likewise, to the best of my knowledge, this is the only book covering this topic.

As an investor in small start ups, I had to read this book twice. The first read, the book didn't seem relevant at all. The second, somewhat more methodical read, the picture became clearer--The book is written for MBA students who think they might go to work someday for a firm that forms venture capital investment groups. That's nice, if you are thinking of working for a big venture capital company. But for the investor $300k - $3M investor wanting to understand issues like how much of the company is my investment worth, what percentage of equity should I take, can I treat my investment as a loan and still expect equity, (if yes) how does the loan repayment work so it does not strip the company of working capital and much needed startup cash, what controls do I have over management, how can I be sure they are doing with the money what they are supposed to be doing and not squirreling cash away, what happens to my equity if management needs more funding, how is management paid a salary, how is management rewarded vis a vis the investors--who is in line first, middle and last--and how do I get out early and late, this book provides answers to some of these questions buried in the case studies. You read a case study teasing out the rules of thumbs by what the investors and ownwers did in a particular case situation. In the process, the reader looks for guidelines, principles, and rules of thumb -- but these are mostly buried deep in the paragraphs or found between the lines of a case study or discussion of a case study. What to do, the rules of thumb for the middling-sophisticated investor are hard to comke by, suggesting this is a textbook meant to supplement classroom lectures and discussions. Richard Gladstone's Guide to Venture Capital is a much better primer, but the book that takes Gladstone to the next level and answers the questions I posed above has not been written by Lerner.

In my opinion this is best and most comprehensive overview of modern VC practices available. Dr. Lerner is cleary the nation's leading authority on VC research and his experiences are detailed in this book.

The case study format is organized into 4 themes (paraphrased): 1. Raising & Structuring Funds, 2. Making Investments, 3. Exiting Invesments, 4. Other forms of VC funds.

so the lessons of each individual case study support a larger and organized theme. Furthermore, the case study format makes the book more entertaining than academic texts tend to be.

If you are somewhat knowledgeable about private equity then this is a "must read". If you are a beginner make sure you become familiar with the ins & outs of private equity/venture capital before reading or else you may miss a lot of the value of this book.

This book provides a good overview of venture capital and buyout fund management. It addresses the investment process through four modules: fundraising, investing, exiting, and new frontiers. There are twenty nine chapters of which nine are instructional and the rest are case studies. Though there is information interspersed within the case studies, I think it would have been better to have had shorter case studies and longer instructional pieces to delve more deeply into subjects.

Lerner has collected and arranged case studies to a very comprehensive and enjoyable book on venture capital, from an academic standpoint. However, the book is never dry as it contains real cases throughout. A great introduction.

First let me start with what this book is not! It is not a textbook and it will not teach you the practical methodology of deal structuring, LBO modeling or valuation. However if you are looking for a well-written, non-technical book that illustrates the rationale and dynamics behind PE/VC investing, look no further.

After diligently reading these case studies, I have become comfortable with the unique terminologies and thought processes involved in each stage of the investment life-cycle. A slightly greater emphasis on the technical aspects would have made this book perfect, but overall I have no complaints.

I couldn't put this book down; I felt like I was reading a captivating novel. It does a great job of introducing the reader to the unique terminology of the VC/PE industry.

However, I wish there was more follow through or structured questions presented for the cases; without sitting in Prof. Lerner's class, I would like to see exactly what broad lessons he is attempting to present and drive home.

The book is quite good,but suffers from the case approach pitfalls- too much details for specific cases, and less generally applicable information. Thsi might be useful in the context of an MBA case study class, but certainly not as a useful reading book on the industry. The actual notes are very short and lack suficient details to be useful.

This book is good, primarily because it has no real competition as so little is written on the subject.

It provides a brief introduction to private equity in the first few pages and goes into case studies thereafter, with a few 'notes' re: private equity in between the case studies.

Case studies are useful for getting a 'feel' for how the private equity process works if you are (i) an investment banking analyst or other professional planning to make the jump into a private equity analyst/associate position or (ii) an MBA student who wants to understand or jump into a private equity associate position. So for doing that, I'd give it a 3-star 'good' rating.

I rate it a 3 because, while it largely succeeds in its own stated goal of being a 'case book', it fails to do what the only real text book on private equity should be doing: analyzing the profession in terms of: (i) its evolution, (ii) strategy re: the private equity group, (iii) strategy re: the private equity group's portfolio companies, (iii) its effects on the economy, employees, government/taxes, society (iv) comparison of the private equity ownership structure vs. other ownership structures (e.g. public corporations, owner-operated companies, conglomerates, wealthy family holding companies), (v) analysis of private equity critcisms, (vi) alternative forms (e.g. SWFs, IFC), (vii) developing markets, and (viii) future. Academics seem to find themselves oddly content not to discuss this industry in any real depth. I believe part of this has to do with their involvement in somewhat unobjective, case study oriented MBA programs that take a 'cookie cutter' approach to educating their students, but I digress.

3 stars. 5 stars, if Lerner does what he should do and makes a private equity book that is analytical and forward-thinking.

Ideal for anyone involved in or looking at getting into private equity. The case studies have real substance and result in depth understanding (as opposed to just knowing) of the key challenges, issues and activities in the industry.

It covers everything from staffing and careers in PE, to raising funds, developing deal flow and managing portfolio companies, with real indepth cases of the successes and failures of individuals and organisations.

I've been involved with PE (from a management view point) for over 2 years, this book put many things in perspective and gave me insight into how others have handled issues similar to the ones I face. www.smartinvestorafrica.com