Venita Fields: What Private Equity Professionals Really Do Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

A. INVESTMENT COMMITTEE

The next phase of the investment process focuses on the role of the investment committee of the private equity firm. After the formal and the detailed due diligence process have been performed, then the final decision is taken by the investment committee. The final decision regarding which investment options are to be chosen and then these options are discussed with the fund managers and then these managers execute the further steps. All the legal documents are then executed and submitted to the fund lawyers. The diagram below illustrates all the key activities that are performed under the head of the investment committee in a private equity firm:

4. INVESTMENT CLOSING

One the deal between the private equity firm and the target company has been finalized with the target company; they both then officially sign the deal between them. Both the parties involved in the transaction will then issue a press release which would announce the terms of the transactions. This is the time when the transaction starts and from that point both the parties that is the private equity firm and the target company, they both take steps towards the closing of the deal. Closing the deal might involve some time for example one year or few months. The time period depends completely on the nature and the size of the transaction.

5. PORTFOLIO AND LIQUIDITY MANAGEMENT

Investments in the private equity firms are assumed to be more risky because the time frames for the transactions to be closed are normally longer and the liquidity of the firm is very low. The private equity firm needs to also perform due diligence on those businesses where the management of the private equity firm is looking forward to invest. This investment is going to be a long term investment, therefore, the management of the company needs to pay special attention to the timing of the future cash flows, so that they can meet all their obligations. Once the private equity firm has invested in its chosen businesses, it will have to manage the information flows, advice the management on important issues and conduct site visits to keep proper track record of all of its investments.

ESSENTIAL SKILLS FOR PRIVATE EQUITY PROFESSIONALS

There are a range of skills that are essential for a private equity professional or which are important to get a job in a private equity firm. The most important ones are:

Ability to understand the industry well and articulate all the important ideas with the other partners with complete clarity.
Ability to structure the deals.
The individual should have a high tolerance for risk.
The work ethics of the investment professionals needs to be good so that all the work is done systematically.
The individual should have the capacity to function, as an executor as well as an executive at the same time.
Leadership is also one of the most important professional qualities which the individual must possess.

GOOD FIT FOR THE FIRM

Omotoba would prove to be a good fit for the firm because he was an enthusiastic individual and had recently went under an initial interview with Venita Field. His view was correct regarding the size of the firm. Since the firm was small and the number of the employees of the company were few, so Omotoba thought that he would have the exposure to each and every part of the private equity firm. The employees of the company would allow him to gain experience along with them. He would learn about many things such as analyzing the potential investments, performing due diligence, closing the transactions, guiding entrepreneurs to success and monitoring the portfolio companies. He would gain the knowledge, experience and the required set of skills that would be needed to manage the portfolio of investments.

CONCLUSION

Omotoba should prepare very well for the second interview. He has the potential to get this job and he could become one of the greatest private equity managers. Winter had provided Omotoba with the exact picture of how the private equity firm operates. He told Omotoba about the monitoring of the portfolio companies, making the tight investment decisions, advising the entrepreneurs and resolving all the serious operational problems. Omotoba could learn all these things and it seems that he has many of the qualities of a private equity professional which are mentioned above. Although right now he does not have enough knowledge regarding the activities being carried out at the private equity firm, but with his true dedication and intelligence he could prove to be a great private equity investor..............................

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