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

INTRODUCTION

Venita Fields is the partner and the senior portfolio manager for Smith Whiley and company. She manages the company’s mezzanine investments and private equity. She is working in the Illinois office where she is generating business for the company by attracting many Western and Midwest investment opportunities. The company is divided into three private equity funds which are SW Pelham fund 2, SW Pelham fund 3 and SW Pelham fund, LP. There were around 300 million dollars under the management of the company.

Venita Fields has the experience of around 19 years in the finance departments of many financial institutions. Apart from that, she has 10 years of experience in the banking industry when she worked at Bank of America. She had managed the investments of around 2 million dollar in the aviation, food, environmental, retail, industrial manufacturing, service sectors and automotive industry during her career. Currently she is working in the Illinois office and they have sixteen portfolio companies. The investment amount equals to around 140 million dollars. Under the management of Ms. Fields, the company had received many awards such as the Business leader of Color in 2005. Ms. Fields herself was recognized as one of the most prominent business leader in 2008 and in 2009.

One of the MBA students of Kellog School of Management, Babatunde Omotoba, was looking to work for Smith Whiley and Company. He had his first interview conducted with Venita Fields. He tried his best to impress Ms. Fields with his strong financial and analytical background and Venita also seemed to approve all his responses but he felt that she was not completely satisfied and was looking for something else. However, Omotoba thought to write a letter to Ms. Fields to thank her for the interview. He was now looking forward for a second interview call.

THE PRIVATE EQUITY INVESTMENT PROCESS

Omotoba will need to demonstrate that he understands the private equity investment process. He must explain the whole process step by step and how the investment process is executed. Each and every phase of the private equity investment process is explained below which will be presented to Venita Fields.

A. IDENTIFY INVESTMENT OPPORTUNITIES

The first and the most important step in the PE industry is the sourcing of the investment opportunities. This is one of the essential skills if one needs to excel in the PE industry. There are a number of channels through which such sourcing investment opportunities could be identified as detailed research, networking, cold calling executives at other attractive companies, internal analysis, meetings with various companies, conversations with industry experts and consultants, industry conferences and the meetings with various other companies. Apart from these sources other common methods for sourcing such investment opportunities include financial intermediaries such as investment bankers. One of the important points to remember while searching out for important investments, is that the potential investment opportunity should fit with the firm’s investment strategy such as value creation strategy, minimum required EBITDA or the required equity check. There are normally around 1000 investments evaluated in a typical year from a typical private equity firm. Then the industry investment team prioritizes those investments. Then approximately 250 investment opportunities are discussed at the investment committee. These are further screened and around 30 investments are further discussed at the final investment committee stage. Finally in the last step the best 10 investments are selected.

B. INVESTMENT ANALYSIS

The next phase in the sourcing process for investment opportunities is the analysis of the investment. Here screening, evaluation and due diligence is performed for the particular investments chosen in the previous phase. The main focus of this phase is due diligence which is a process for the analysis and evaluation of the potential investment. It is basically the investigation process carried out by the investors or private equity firms. Every private equity firm must make sure that the information provided to them is authentic and reliable on which they are going to base their decisions. The private equity firm needs to perform due diligence on each of the potential investments. The fund manager needs to find out the market capitalization for the company. Then the revenue, margin and profit trends for the company should be analyzed and evaluated to know........................

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Since then, he heard her say in a private meeting of justice, Babatunde Omotoba wanted to work in the fields Venita, co-founder and senior managing director of private equity firm Smith & Whiley company. He wrote and asked her for an informational interview, and was pleased to accept her invitation to meet her at the Regional Office in Evanston, Illinois. After the interview, however, Omotoba came to the realization that the dark, in spite of all their products and research private equity firms, the study of types of transactions that they do, and assess the analytical tools used to perform due diligence on companies and investment decisions He did not have a complete picture of the actual day-to-day operations of the private equity professionals perform. He spent time reviewing material from the office of the career management of private equity, and he meets two Kellogg alumni informational interview. He also discusses the investment process. Omotoba it ends with a broader perspective on the human aspect of private equity for the analytical and financial aspects, as it expects the meeting Paul again, we hope to get a job offer. "Hide
by Derrick Collins, Ed Finkel, Scott T. Whitaker Source: Kellogg School Management 15 pages. Publication Date: June 1, 2010. Prod. #: KEL500-PDF-ENG