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Private Equity – Venture Capital Partnership for Success

Learn about the earning and investment models in Private Equity and Venture Capital, presented by CapMan Tech. Discover the values and vision of CapMan, a Nordic private equity powerhouse. Gain insights into technology investment criteria and the investment process.

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Private Equity – Venture Capital Partnership for Success

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  1. Private Equity – Venture CapitalPartnership for Success BI Bachelor in Entrepreneurship September 26, 2006 Erik Berger Investment Director CapMan Tech

  2. Schedule • Background • The PE/VC Earnings Model • The PE/VC Investment Model • Closing Remarks • Q&A

  3. Schedule • Background • The PE/VC Earnings Model • The PE/VC Investment Model • Closing Remarks • Q&A

  4. CapMan – the Nordic private equity house • Full Nordic presence and market coverage • established in 1989 • offices in Helsinki, Stockholm, Copenhagen and Oslo • listed on Helsinki Stock Exchange since 2001 • Unique listed asset manager • manages specialised third party private equity, venture capital and real estate funds • dedicated teams in each investment area • Funds under management approx. €2.3 billion • in addition assets managed/advised by Access Capital Partners approx. €1.3 billion* * CapMan owns 35% of affiliated company Access Capital Partners.

  5. Four investment areas in four Nordic countries CapMan Private Equity, €1.8 billion CapManReal Estate€500 million CapMan Buyout CapMan Technology CapMan Life Science • Commercial properties • Investments €5-50 million per real estate • All industries • Middle market equity investments approx. €10-50 million/company • CapMan funds make both equity and mezzanine investments in Nordic buyouts • Expansion and later stage technology companies • Equity investments approx. €3-15 million/company • Medical technology • Equity investments approx. €2-7 million /company

  6. CapMan’s Vision Our vision is to be the preferred Nordic private equity partner for investors and entrepreneurs

  7. CapMan’s values • Industrial hands-on approach • We concentrate on enhancing our portfolio companies’ business by taking actively part in developing their operations. We provide more than just financial support. • High ethics • We believe in integrity and transparency. We are a reliable partner and we respect our stakeholders. • Dedication • We are committed to reaching our objectives. We are innovative and aim to be the trendsetter for the industry. Employees are our most important resource. • Profitability • We aim for profitability and rise in share value without forgetting our other values. We strive for profitability through successful investment activities, growth and cost effectiveness. • Independency • We take our decisions independently and are not part of anyfinancial group.

  8. Schedule • Background • The PE/VC Earnings Model • The PE/VC Investment Model • Closing Remarks • Q&A

  9. Earnings model capital + profit =realised gains Investment objects Portfolio companies Real estates Private equityinvestment CapManmanages Private equity funds managed by CapMan Managementfee and carriedinterest toCapMan Commitmentsto funds • Investors • approximately 100 Finnish and international investors have invested in CapMan’s private equity funds. • investors include insurance companies, pension funds, banks and other institutional investors. capital + profit - management fees and carried interest for CapMan= returns to investors

  10. Earnings model • Fund structure • Committed Capital vs. Called Capital • Management Fee • 1,5%-2% (PE) 1,75%-3% (VC) VC Typical 2,25% • Hurdle • Typical 8% • Carry Split • Typical 20/80

  11. Fund Life Span • Closed End Fund • 10 year fund (1+1) • Initial Investment Period 5 years • Prospecting 0-5 years • Development of Investment 3-5 years • Divestment (Exit) 3-5 years

  12. Schedule • Background • The PE/VC Earnings Model • The PE/VC Investment Model • Q&A

  13. CapMan’s Technology Investment Criteria • Favourable market development • Market growth • Consolidation opportunity • Competitive technology • Proven with real customers • A scalable business model with strong growth and profitability potential • Clear value drivers • Realistic exit potential • An experienced management team

  14. Investment Model • Prospecting • Term Sheet • Due Diligence • Investment Agreement IM (or Share Purchase Agreement SPA) • Shareholders Agreement (SHA) • Companies Act (Aksjeloven/Allmenaksjeloven) • Bylaws (Vedtekter)

  15. Investment model Venture Capital = Risk Capital • Typical Terms and Conditions • Preferred Shares (Latest Money In has the Highest Value) • Anti-Dilution • Liquidation Preference • Pre-Emption Right (Right of First Refusal) • Tag Along • Drag Along • Forced Exit

  16. Schedule • Background • The PE/VC Earnings Model • The PE/VC Investment Model • Closing Remarks • Q&A

  17. Closing Remarks • Right Capital for the Right Phase • Management, Management & Management • A Balanced Deal gives Predictability on both the Ownership Side and the Operational Side • You don’t get what you deserve, only what you negotiate!

  18. Q&A Thank you!

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