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Copyright © 2022 by Tamara Sakovska. All rights reserved.
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To my family
The Private Equity Toolkit aims to be a book like no other in its field. It is the industry's first practical reference guide to cover all critical aspects of private equity deal execution, from sourcing to exit. As an experienced deal practitioner, I focus on the technical fundamentals and practical judgment skills required by investment professionals throughout the entire lifecycle of a private equity transaction.
This book will introduce you to a number of my proprietary frameworks, checklists and cheat sheets that will enable you to develop your own personalized blueprint for originating, evaluating, executing and monetizing private equity investments. With The Private Equity Toolkit by your side, you will be able to dive straight into actionable advice to address your most pressing needs, including:
Private equity is one of the most fascinating fields in contemporary finance. Private equity professionals get to explore promising investment themes, meet accomplished entrepreneurs, walk the factory floors of real businesses, determine the value of illiquid assets and engineer the main transaction terms, with heated deal negotiations often extending into the late hours of the night. Since private equity is an interdisciplinary field, successful investors need to master a wide range of skills. Thorough technical knowledge of accounting and finance does not suffice on its own and needs to be combined with solid commercial judgment and exceptional relationship-building skills. Those private equity professionals who want to succeed are expected to originate attractive investment opportunities, generate differentiated deal insights, form productive working relationships with management teams, add value on portfolio company boards and achieve profitable investment exits.
How do they acquire these skills at present? Mostly, on the job. Apart from the book that you are about to read, there appears to be no universal reference guide that one can turn to in order to get a systematic overview of the practical aspects of private equity deal execution, from sourcing to exit. When investment professionals start their careers at a private equity fund, they learn how to do their job from senior colleagues by following a “master—apprentice” training model. However, senior private equity professionals generally have little time to dedicate to coaching new hires because they themselves are spread very thinly, often consumed by live deals or portfolio company crises that always take priority. Another obstacle that young investment professionals face is a lack of opportunity to acquire more advanced and specialized skills—for instance, those relating to creating effective reporting 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: petoolkit@lavragroup.com
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I owe a debt of gratitude to my family, who supported me throughout my book-writing journey and helped bring this project to fruition. A warm thank-you to my wonderful husband Frederik, who was the first reader of every chapter in the book (not always entirely by choice). I would also like to acknowledge the invaluable support of my children, August and Daria. Thank you for coming with me to my office during numerous weekends and inspiring me to persevere during challenging times. I also would like to thank my sister Julia, my parents and grandparents for instilling me with a strong work ethic and teaching me the importance of critical thinking.
I am fortunate to have an extraordinary group of friends, many of whom encouraged me to write this book and provided constructive comments on my manuscript: thank you, Stefan Loesch, Oksana Denysenko, Helena Clavel-Flores, Irina Grigorenko, Vittoria Stefanello, Leopoldo Carbone, Julia Shur and Oksana Tiedt. In addition, I am grateful to Lee Barbour for delivering first-class editing support, and to Emma Stefanello and Michael Majdalani for providing excellent research assistance.
I would like to express my gratitude to Eli Talmor, Dirk Donath, Giampiero Mazza, Joshua Rosenbaum, Joshua Pearl, Alex Emery and Ted Berk. Each of these highly accomplished individuals were kind enough to read my book and provide me with their personal endorsement.
A special thanks to everyone in the Wiley team who assisted me in making this book a reality: my acquisitions editor, Bill Falloon, my assistant acquisitions editor, Samantha Enders, my managing editor, Purvi Patel, and my Editorial Assistant, Samantha Wu.
Finally, I would like to say thank you to a long list of brilliant work colleagues who taught me everything I know about private equity and dedicated their time to developing my investment acumen early in my career. I can't name you all, but you probably remember the long hours we worked together and know who you are, folks. Thank you!
Tamara Sakovska is a private equity investor, board director and the founder of Lavra Group. She has over two decades of finance and investment experience gained at Goldman Sachs, HarbourVest Partners, Warburg Pincus, Permira, Eton Park and Global Family Partners.
Tamara's investment experience includes originating, leading and executing leveraged buyouts, minority and control growth equity transactions as well as private investments in publicly listed companies. She has also invested in private equity funds-of-funds and structured strategic co-investment partnerships with institutional investors, corporations and ultra-high-net-worth family groups. During her investment career, she has gained in-depth, global transaction experience across 14 countries in the technology, telecommunications, energy, natural resources, real estate and consumer sectors, among others.
Tamara is a tenured board member with a strong track record of managing complex strategic and corporate governance issues in both publicly listed and private companies. She has extensive corporate governance expertise, holds a Diploma with Distinction in Company Direction, is a Chartered Director and a Fellow of the Institute of Directors (UK). In 2018, Tamara received the Director of the Year Award in the Chartered Director category. She currently serves as an Independent Director and Chair of the Nominating Committee on the boards of two public companies listed on the London Stock Exchange and the Nasdaq, respectively.
Tamara holds an MBA with Distinction from London Business School (UK) and a BA with Honors and Distinction in Economics and Art History from Stanford University (USA), where she graduated Phi Beta Kappa and received the Anna Laura Myers Prize in Economics.