12. Interview with a Private Equity Investor (pei)

1. ҉ When listening Listen to the interview and find answers to the following questions (make notes):

1. What are the two ways that private equity invests money in?

1) ___________________________________________________

2) ___________________________________________________

2. What is ‘scouting’? _________________________________________ ___________________________________________________________

3. What mechanism is used to buy the target company? Where does the money for the buy-out come from? _______________________________

1) __________________________________________________

2) __________________________________________________

4. What exit strategies after the restructuring does the private equity firm have?

1) __________________________________________________ 2) __________________________________________________

3) __________________________________________________ 4) __________________________________________________

5. What happens with the people at the lower level of the company after a buy-out?

1) __________________________________________________ 2) __________________________________________________

3) ___________________________________________________ 4) ___________________________________________________

6. What players are involved in the buy-out process? What are their functions? Match the players to the functions they perform. There are some extra players in the list.

1) lawyers 2) financial advisors 3) accounting firms 4) tax consultants 5) investment banks 6) business consulting companies 7) white knights 8) corporate raiders

analyze how the business is going to be restructured or developed. arrange the debt to buy the target company. check the books of the target company. do the due diligence. evaluate the value of the target company. make sure that there is no unpaid tax. monitor complex legal issues. present the figures of the target company to commercial banks. present the structure of the repayment.

2. When listening Guess the missing words (the first letters have been given to help you). ҉ Then listen to the interview again and check your answers. Translate these terms and collocations into Russian.

1. A typical target might be a m_______________-sized company with a strong c________________ f_______________ where the owners are prepared to sell a s__________________ in the company.

2. When a private equity firm buys a target company, it uses a newly-formed company called an ‘SPV’ (S_____________ P_____________ V________________). As an example, half the money the SPV needs might come from e_________________ (capital provided by the new owners and the existing shareholders) and half might come from d_________________ (a bank loan that has to be repaid).

3. If the PEI own more equity than the original shareholders, the former have a c________________ stake in the SPV. If the PEI own less than the latter, it is called a m_______________ i________________.

4. When PEI take a l________________ from the bank, it’s called a l_____________ b_______________ — they use only a small amount of their own money to r_________________ a large amount of funds.

5. There are cases when PEI buy a public company listed on a s__________________ market, then d___________________ it and r___________________ it, and then r___________________ it after they’ve made it more profitable.

6. After buying the target company, the private equity firm restructures it. This can involve a ‘b________________ up’ (making the company larger by buying other smaller companies and merging them with the o________________ target company) or a ‘b______________ down’ (making it smaller by selling n_____________ a_________________, cutting costs, and generally r________________ the business).

7. PEI claim that they make the whole bought-out business more v____________________ in the long term.

8. There are also tax consultants involved to make sure that there is no o____________________ tax.

3. After listening Discuss any interesting issues with some colleagues.