- CFA Exams
- 2022 Level II
- Study Session 15. Alternative Investments
- Reading 41. Private Equity Valuation
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Learning Outcome Statements PDF Download
| 1. Value creation in private equity a. explain sources of value creation in private equity; b. explain how private equity firms align their interests with those of the managers of portfolio companies; | |
| 2. Valuation characteristics and issues in venture capital vs. buyout c. distinguish between the characteristics of buyout and venture capital investments; d. describe valuation issues in buyout and venture capital transactions; e. explain alternative exit routes in private equity and their impact on value; | |
| 3. Private equity fund structures and valuation f. explain private equity fund structures, terms, valuation, and due diligence in the context of an analysis of private equity fund returns; g. explain risks and costs of investing in private equity; h. interpret and compare financial performance of private equity funds from the perspective of an investor; i. calculate management fees, carried interest, net asset value, distributed to paid in (DPI), residual value to paid in (RVPI), and total value to paid in (TVPI) of a private equity fund; | |
| 4. A note on valuation of venture capital deals j. calculate pre-money valuation, post-money valuation, ownership fraction, and price per share applying the venture capital method 1) with single and multiple financing rounds and 2) in terms of IRR; k. demonstrate alternative methods to account for risk in venture capital. j. calculate pre-money valuation, post-money valuation, ownership fraction, and price per share applying the venture capital method 1) with single and multiple financing rounds and 2) in terms of IRR;k. demonstrate alternative methods to account for risk in venture capital. |
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