How to build a private equity & venture capital course: a complete guide for lecturers

Central question: what role do Private Equity and Venture Capital play in allocating capital, owning companies and financing growth?

Most students arrive with a loose understanding of PE and VC. They may associate private equity with buyouts and venture capital with start-ups, but they often do not yet see how both sit within the wider private capital ecosystem. This first concept gives students the map they need before they begin analysing deals.

What this concept covers

• Private versus public markets and why some companies raise capital privately.
• Private equity and venture capital as related but distinct models.
• The private capital ecosystem: LPs, GPs, founders, management teams, advisors, lenders, buyers and regulators.
• The fund lifecycle: fundraising, investment period, ownership, exit and distributions.
• Sources of return: growth, margin improvement, multiple expansion, deleveraging, governance and exit timing.

Learning outcomes

By the end of this concept, students should be able to:

• Distinguish private equity, venture capital, growth equity, buyouts and public-market investing.
• Explain why companies and investors may prefer private capital in specific situations.
• Map the main stakeholders in a private capital transaction.
• Describe the basic fund lifecycle from fundraising to exit.
• Identify where PE and VC overlap and where their investment logic differs.

Supports Course Outcomes 1 and 2.

How to teach it

• Start with a familiar company and ask whether it is public, private, venture-backed, sponsor-owned or founder-owned.
• Build a simple private capital ecosystem map on the board.
• Contrast a mature buyout target with an early-stage venture-backed company.
• Ask students who provides capital, who manages it, who receives it and who bears the risk.

Case-style example

Northbridge Foods is a profitable family-owned manufacturer considering a sale to a private equity sponsor. PixelMed AI is a fast-growing health-technology start-up raising Series A funding. Ask students to compare the investment questions in each case: cash flow, leverage and governance for Northbridge; market size, adoption, founder quality and future funding risk for PixelMed.

Where students struggle

Students often use PE and VC interchangeably, or assume the only difference is company age. They need to see that the deeper difference lies in ownership, control, risk, return, financing structure and uncertainty.

Reading and a quick check

Assign an introductory private capital or entrepreneurial finance chapter. Close by asking students to complete: ‘A private equity investor would care most about…’ and ‘A venture capital investor would care most about…’

Where it leads

Once students understand the ecosystem, they can examine the fund structure that shapes how investors behave, how they are paid and why incentives matter.

Central question: how does the fund structure shape the behaviour, incentives and constraints of private capital investors?

Students often analyse deals as if the investor is simply using their own money. This concept shows that PE and VC decisions are shaped by a fund structure: capital comes from limited partners, is managed by general partners, is invested over a defined period, and must eventually be returned.

What this concept covers

• Limited partners and general partners: LPs provide capital; GPs source, select, manage and exit investments.
• Fund life and investment period, including deployment pressure and exit timing.
• Management fees, carried interest, hurdle rates, the GP catch-up, distribution waterfalls, preferred returns and clawback.
• Capital calls, distributions, dry powder and the J-curve, with fund performance measured by DPI, TVPI, MOIC, IRR and public market equivalent (PME), compared by vintage year.
• Agency and alignment between LPs, GPs and portfolio companies.

Learning outcomes

By the end of this concept, students should be able to:

• Explain the roles of LPs and GPs in a private capital fund.
• Describe the stages of a fund lifecycle.
• Interpret basic management fee and carried interest mechanics.
• Explain why fund size, mandate and timing affect investment decisions.
• Identify incentive conflicts between LPs, GPs and portfolio companies.

Supports Course Outcomes 1 and 2.

How to teach it

• Draw a simple fund structure from LP commitments to portfolio-company exits.
• Use a numerical example to show management fees and carried interest.
• Compare a small early-stage VC fund with a large buyout fund.
• Ask what each fund can and cannot invest in.

Case-style example

Horizon Capital has raised a $600 million buyout fund and is in year four of its investment period. It can invest in a stable services company needing a $90 million equity cheque or a smaller software company needing $18 million. Students decide which fits the fund’s mandate, timing, concentration limits and return target.

Where students struggle

Students often treat the fund as a neutral pool of money. They miss how fund life, deployment pressure, return targets and fee structures shape behaviour.

Reading and a quick check

Assign a reading on private equity fund structure and compensation. Close with a simple fee-and-carry calculation and ask how incentives could affect deal selection.

Where it leads

Once students understand the fund and its incentives, the next question is how funds find opportunities that fit their strategy.

Central question: how do private capital investors decide which opportunities are worth serious attention?

A PE or VC course should not begin deal analysis at the valuation stage. In practice, investors see many more opportunities than they can evaluate deeply. This concept teaches students how funds source deals, screen opportunities and form investment theses before committing time and resources.

What this concept covers

• Deal origination through proprietary sourcing, intermediated auctions, founder networks and sector mapping.
• Screening criteria: sector, size, geography, growth, profitability, ownership situation, founder quality and exit potential.
• Investment thesis development and the difference between a company description and an investable argument.
• Pattern recognition and the danger of bias.
• The cost of attention and why funds need discipline before entering full diligence.

Learning outcomes

By the end of this concept, students should be able to:

• Explain the main sources of PE and VC deal flow.
• Distinguish a descriptive company summary from an investment thesis.
• Build a first-pass screening framework for a fund.
• Assess whether an opportunity fits a fund’s mandate.
• Identify which questions must be answered before diligence.

Supports Course Outcomes 3 and 4.

How to teach it

• Give students ten short company profiles and a fund mandate.
• Ask them to select the three opportunities worth reviewing.
• Require a one-sentence investment thesis for each selected opportunity.
• Compare choices across groups to reveal different screening logic.

Case-style example

Atlas Growth Partners is a growth equity fund focused on profitable European B2B software companies. It receives a consumer app with no revenue, a profitable B2B payments platform and a hardware start-up with high capital needs. Students decide which opportunity best fits the mandate and why.

Where students struggle

Students often jump straight to valuation without asking whether the deal belongs in the fund’s pipeline at all.

Reading and a quick check

Assign a reading on deal origination or investment thesis development. Close by asking students to write: ‘We should investigate this company because… The main issue diligence must prove is…’

Where a simulation fits

The Investment Banking Simulation can fit after this concept or after valuation because it helps students practise transaction screening, company analysis and deal rationale before deeper PE/VC judgement.

Where it leads

After students can screen an opportunity, they need to analyse the underlying business and market before deciding what it might be worth.

Central question: is this a good business in an attractive market, or only a company with an appealing story?

Students often over-rely on growth narratives. This concept gives lecturers a way to slow the analysis down and ask what actually drives company quality: customers, revenue model, margins, retention, competition, scalability, capital intensity and management execution.

What this concept covers

• Business model logic: how the company creates value, charges customers and earns margin.
• Market attractiveness: size, growth, fragmentation, regulation, cyclicality and competitive intensity.
• Unit economics, retention, payback, gross margin and contribution margin where relevant.
• Revenue quality: recurring versus one-off revenue, concentration, churn, pricing power and contract visibility.
• Operational scalability and management quality.

Learning outcomes

By the end of this concept, students should be able to:

• Analyse how a company creates and captures value.
• Assess whether a market is attractive for private capital investment.
• Identify the economic drivers of a business model.
• Distinguish revenue growth from quality growth.
• Explain what would need to be true for the investment thesis to work.

Supports Course Outcomes 3 and 4.

How to teach it

• Use one company profile and ask students to map the revenue model.
• Ask them to identify the three most important drivers of value.
• Compare a high-growth cash-burning company with a slower-growth profitable company.
• Ask which is more attractive for a VC fund and which for a buyout fund.

Case-style example

FreshCart Logistics provides cold-chain delivery to online grocery platforms. Revenue is growing quickly, but margins are thin, customer concentration is high and delivery density varies by region. Students assess whether the same business is attractive through a VC lens and through a buyout lens.

Where students struggle

Students often confuse market growth with investment attractiveness. A growing market can still be unattractive if competition is intense, margins are weak or customers capture most of the value.

Reading and a quick check

Assign a reading on business model analysis or unit economics. Close by asking: what are the three variables that would most change your view of this company?

Where it leads

Once students understand the business and market, they can move into valuation and ask what the opportunity is worth under different assumptions.

Central question: what is the company worth, and how much confidence should investors place in that valuation?

Valuation in PE and VC should not be taught as a single correct answer. Private companies have less visible market pricing, more uncertain information and greater dependence on assumptions. This concept helps lecturers teach valuation as a range of views rather than a mechanical output.

What this concept covers

• Valuation for investment decisions, negotiation, ownership dilution, exit planning and return analysis.
• DCF analysis: forecasts, discount rates, terminal values and sensitivity to assumptions.
• Comparable companies and precedent transactions as benchmarks with limitations.
• Venture valuation, pre-money and post-money valuation, dilution and future rounds.
• Scenario analysis and assumption discipline.

Learning outcomes

By the end of this concept, students should be able to:

• Apply relevant valuation methods to private-company investment situations.
• Build or interpret a valuation range rather than a single-point estimate.
• Explain which assumptions drive valuation most.
• Compare valuation methods and identify when each is weak.
• Connect valuation to ownership, dilution, return targets and negotiation.

Supports Course Outcomes 5, 7 and 8.

How to teach it

• Give students a simplified company financial profile.
• Ask them to value it using at least two methods.
• Require them to identify the three assumptions that most affect value.
• Compare a buyout valuation with a VC valuation.

Case-style example

MedFlow Systems sells workflow software to private clinics. It has recurring revenue, high retention and strong margins, but growth is slowing. A sponsor focuses on cash flow and exit multiple, while a growth investor focuses on international expansion. Students develop a valuation range for each perspective.

Where students struggle

Students often believe the model is more precise than the inputs justify. They may produce a valuation without explaining which assumptions are fragile.

Reading and a quick check

Assign a valuation chapter or technical note on private company valuation. Close by asking: if you had to defend only one assumption in this valuation, which one would it be and why?

Where a simulation fits

The Investment Banking Simulation can be used as an optional early transaction-analysis exercise after valuation, with the main placement later around due diligence and recommendation logic.

Where it leads

Valuation sets the economic basis for the investment, but the next concept shows that terms and structure can matter as much as headline price, especially in Venture Capital.

Central question: how should a venture investment be structured when the company’s future is highly uncertain?

Venture capital cannot be taught properly through valuation alone. The structure of the investment matters: ownership, control, liquidation preferences, anti-dilution rights, board seats and future financing all affect the distribution of risk and return between founders and investors.

What this concept covers

• Stages of venture financing from convertible notes and SAFEs, through priced seed rounds and valuation caps, to Series A and growth rounds.
• Pre-money and post-money valuation and ownership calculations.
• The cap table: fully diluted ownership, the option pool, founder vesting and cliffs, and the effect of future rounds on founders, employees and investors.
• Liquidation preference, anti-dilution protection, board seats and protective provisions.
• Staged financing logic and founder-investor alignment.

Learning outcomes

By the end of this concept, students should be able to:

• Explain how venture financing rounds are structured.
• Calculate basic pre-money, post-money and ownership outcomes.
• Interpret liquidation preferences and dilution.
• Identify how investor protections change risk allocation.
• Critique a term sheet from both founder and investor perspectives.

Supports Course Outcomes 5 and 6.

How to teach it

• Start with a simple funding round and calculate ownership.
• Add a future down round and show how dilution changes incentives.
• Introduce liquidation preference using exit-proceeds scenarios.
• Split the class into founders and investors to negotiate a term sheet.

Case-style example

NovaGrid Robotics is raising a $12 million Series A. Investor A offers a $48 million pre-money with a 2x participating liquidation preference, full-ratchet anti-dilution and two of five board seats. Investor B offers a $34 million pre-money with a 1x non-participating preference, broad-based weighted-average anti-dilution and one board seat. Students recommend an offer for the founder, then run the exits at $200 million, $60 million and $25 million. The ranking inverts as the exit falls, which is the entire lesson.

Where students struggle

Students often focus only on valuation and ownership percentage. They miss how control rights and liquidation preferences can change the practical economics of a deal.

Reading and a quick check

Assign a reading on venture capital contracting or term sheets. Close by asking students to compare two offers: one with a higher valuation and harsher terms, and one with a lower valuation but cleaner governance.

Where it leads

VC terms show how structure affects risk and reward. The next concept turns to the buyout model, where structure is shaped by acquisition price, leverage, cash flow and exit assumptions.

Central question: how does a sponsor create returns in a buyout, and what assumptions must hold for the deal to work?

This is usually the most technically recognisable part of a PE course, but it should not be reduced to spreadsheet mechanics. Students need to understand the logic of a buyout: acquisition price, leverage, cash flow, operating performance, debt repayment, exit multiple and sponsor return.

What this concept covers

• LBO structure: sponsor equity, debt financing, purchase price and sources-and-uses logic.
• Return drivers decomposed as a value creation bridge: EBITDA growth, margin improvement, deleveraging, multiple expansion and cash generation.
• Entry and exit multiples, and why the entry multiple can dominate everything the sponsor does to the business.
• Free cash flow and debt service: mandatory amortisation, the cash sweep, and whether the business generates enough to reduce leverage on schedule.
• IRR, MOIC, sensitivity analysis and value creation plan.

Learning outcomes

By the end of this concept, students should be able to:

• Explain how a leveraged buyout is structured.
• Identify the main drivers of sponsor return.
• Interpret the relationship between debt, cash flow and risk.
• Assess whether a company is a credible buyout target.
• Analyse how changes in operating assumptions affect IRR and MOIC.

Supports Course Outcomes 7 and 8.

How to teach it

• Begin with a simple sources-and-uses structure.
• Show how debt repayment and exit value produce sponsor returns.
• Ask students to test what happens if growth is lower or the exit multiple falls.
• Require students to state whether returns come from leverage, earnings growth, margin improvement, multiple expansion or all four.

Case-style example

Westport Components manufactures specialist parts for industrial machinery. It has stable customers, predictable cash flow and modest growth. A sponsor believes it can improve margins and acquire two smaller competitors. Students decide whether Westport is a good LBO candidate.

Where students struggle

Students often treat a high IRR as proof of a good deal without asking which assumptions produce it. They may also underestimate how fragile returns become when leverage is high.

Reading and a quick check

Assign an LBO technical note or buyout chapter. Close by asking: is this return driven mainly by leverage, earnings growth, margin improvement, multiple expansion or debt paydown?

Where a simulation fits

The Leveraged Buyout Simulation fits directly after this concept, once students understand price, leverage, operating performance and exit value.

Where it leads

Once students understand LBO value creation, they can examine the financing structure that supports or constrains the transaction.

Central question: how much debt can the company support, and when does leverage turn from return enhancer into risk amplifier?

Debt capacity remains central to a PE/VC course. For buyouts especially, the capital structure determines not only returns but also the room for error.

What this concept covers

• Debt capacity and how lenders assess cash flow, asset coverage, cyclicality, margins and downside resilience.
• Capital structure: senior secured and second lien debt, unitranche, mezzanine, PIK instruments, preferred equity and sponsor equity, and the move from bank syndication to private credit and direct lending.
• Maintenance versus incurrence covenants, cov-lite structures, leverage and interest coverage tests, net debt, free cash flow and lender protections.
• Refinancing risk and market conditions.
• How financing risk differs between PE-backed and VC-backed companies.

Learning outcomes

By the end of this concept, students should be able to:

• Explain how debt capacity is assessed in a buyout.
• Identify the major components of a capital structure.
• Analyse how leverage affects returns and downside risk.
• Interpret the role of covenants and lender protections.
• Evaluate whether a proposed capital structure is sustainable.

Supports Course Outcomes 7, 8 and 10.

How to teach it

• Give students a company with EBITDA, cash flow and capex assumptions.
• Ask them to propose a sustainable leverage level.
• Introduce a downside case and test covenant pressure.
• Compare sponsor preferences with lender concerns.

Case-style example

BrightPath Education is a profitable training provider with steady revenue but heavy investment needs. A sponsor wants to maximise leverage to improve returns. Students decide how much debt the business can support while leaving room for execution delays.

Where students struggle

Students often see leverage only as an equity-return tool. They need to understand the lender’s view and the operating consequences of a tight capital structure.

Reading and a quick check

Assign a reading on debt capacity or capital structure in buyouts. Close by asking: what is the first assumption that would make this debt structure unsafe?

Where a simulation fits

This concept prepares students for the Leveraged Buyout Simulation and later for the Debt Restructuring Simulation.

Where it leads

Once the deal has an investment thesis, valuation and proposed structure, students need to test whether the evidence is strong enough for an investment committee decision.

Central question: what evidence is strong enough to support an investment recommendation, and what unresolved risks should stop the deal?

Due diligence is often taught as a checklist, but it should be taught as a decision process. Students need to understand what diligence is trying to prove, what can be verified, what remains uncertain and how findings should change the recommendation.

What this concept covers

• Commercial due diligence: market size, customer needs, competition and growth assumptions.
• Financial due diligence: quality of earnings, adjusted EBITDA and which add-backs survive scrutiny, revenue recognition, working capital and forecast reliability.
• Legal, regulatory, operational and management diligence.
• Red flags, materiality and risk mitigation.
• Working from the information memorandum, management presentation and data room, including vendor due diligence, through to investment committee discipline and recommendation writing.

Learning outcomes

By the end of this concept, students should be able to:

• Explain the purpose of due diligence in private capital investing.
• Distinguish different diligence workstreams.
• Identify red flags that could change price, terms or willingness to invest.
• Convert diligence findings into an investment recommendation.
• Prepare the core elements of an investment committee memo.

Supports Course Outcomes 4, 5 and 8.

How to teach it

• Give students a short investment memo and a set of diligence findings.
• Ask which findings are material and which are secondary.
• Require a revised recommendation: proceed, renegotiate, pause or walk away.
• Run a mock investment committee where students defend their view.

Case-style example

ClearWater Clinics appears attractive on margins and demand, but diligence reveals customer concentration, inconsistent revenue recognition and a pending regulatory review. Students decide whether to proceed, renegotiate or pause, and explain what terms or evidence would change the recommendation.

Where students struggle

Students often list diligence issues without explaining how they affect the investment decision. They need to move from ‘we found a risk’ to ‘this risk changes price, terms, structure or recommendation.’

Reading and a quick check

Assign a reading or technical note on due diligence and investment memos. Close by asking students to write a one-page IC recommendation with three unresolved risks and three mitigants.

Where a simulation fits

The Investment Banking Simulation supports this stage by helping students practise transaction analysis, recommendation logic and role-based decision-making.

Where it leads

Once an investment is approved and completed, the course moves from buying the company to owning it.

Central question: after the investment is made, how does the investor help create value without destroying the business?

Private capital does not end at closing. This concept shifts students from transaction thinking to ownership thinking. PE and VC investors must monitor performance, support management, govern effectively and create value over time.

What this concept covers

• Governance after investment: board roles, investor rights, reporting cadence and decision authority.
• Management incentives: rollover and sweet equity, management equity plans, ratchets, option pools and bonus plans.
• 100-day plans and early post-investment priorities.
• Operational value creation through pricing, procurement, sales effectiveness, systems and working capital, and inorganic growth through bolt-ons and buy-and-build.
• VC value-add: hiring, introductions, follow-on funding, strategic guidance and milestones.

Learning outcomes

By the end of this concept, students should be able to:

• Explain how governance changes after private capital investment.
• Design a simple 100-day value creation plan.
• Identify appropriate KPIs for monitoring a portfolio company.
• Assess how management incentives affect behaviour.
• Compare PE and VC approaches to portfolio support.

Supports Course Outcomes 8 and 9.

How to teach it

• Ask students to imagine the deal closed yesterday.
• Require them to identify the first five management priorities.
• Build a KPI dashboard linked to the original investment thesis.
• Compare what a PE sponsor would do with what a VC investor would do.

Case-style example

UrbanNest Living is a home-furnishings retailer acquired by a PE sponsor. The thesis depends on improving margins, launching online sales and reducing inventory issues. Students build a 100-day plan with owners, KPIs, timelines and risks.

Where students struggle

Students often stop at the transaction. They need to see that returns are earned during the ownership period, not just in the acquisition model.

Reading and a quick check

Assign a reading on portfolio governance or operational value creation. Close by asking: what must change in the first 100 days for the investment thesis to remain credible?

Where it leads

After value creation comes the question every fund must eventually answer: how and when should the investor exit?

Central question: how should the investor realise value, and which exit route best fits the company, market and fund?

Students often treat exit as a final line in a model. This concept makes exit strategy explicit. The route, timing and buyer universe can materially change fund returns, management incentives and strategic outcomes for the company.

What this concept covers

• Exit routes: trade sale to a strategic or financial buyer, secondary buyout, IPO, dividend recapitalisation, and continuation vehicles in the GP-led secondaries market.
• M&A exits: strategic buyer logic, synergies, auction processes and negotiation, including carve-outs and take-private transactions as buyer-side contexts.
• IPO exits: public-market readiness, equity story, valuation, investor demand and timing.
• Fund return implications: DPI, TVPI, IRR, MOIC and timing of distributions.
• Exit readiness: governance, reporting, management depth and market conditions.

Learning outcomes

By the end of this concept, students should be able to:

• Compare the main exit routes available to private capital investors.
• Explain when an M&A exit may be preferable to an IPO.
• Assess whether a company is ready for public markets.
• Connect exit timing to fund returns and LP distributions.
• Recommend an exit strategy for a portfolio company.

Supports Course Outcomes 9 and 10.

How to teach it

• Give students a portfolio company profile and three possible exit routes.
• Ask them to identify likely buyers, timing and valuation logic.
• Compare strategic sale versus IPO.
• Discuss how fund life and LP expectations influence exit timing.

Case-style example

SecureCloud Analytics is a sponsor-backed cybersecurity software company with strong recurring revenue and international growth, but public markets are volatile. A strategic buyer has expressed interest. Students decide whether to pursue a trade sale now or prepare for an IPO later.

Where students struggle

Students often assume the highest valuation route is automatically best. They need to consider execution certainty, timing, market windows, fund life and stakeholder risk.

Reading and a quick check

Assign a reading on exit strategy, IPO readiness or M&A sale processes. Close by asking: what evidence would make you switch from IPO to trade sale, or from trade sale to IPO?

Where a simulation fits

The M&A Simulation fits trade-sale exits and acquisition negotiation. The Initial Public Offering Simulation fits public-market readiness, valuation, roadshow and pricing dynamics.

Where it leads

Not every investment exits cleanly. The final concept asks what happens when the capital structure, operating plan or market conditions break the investment case.

Central question: what should investors do when the investment case breaks down, and how should they remain accountable to LPs and stakeholders?

A credible PE/VC course should include downside cases. Not every deal reaches the planned exit. Leverage can become unsustainable, growth can disappoint, markets can close, covenants can be breached and stakeholders can disagree over value.

What this concept covers

• Sources of distress: over-leverage, revenue decline, margin compression, liquidity pressure and failed growth assumptions.
• Restructuring logic: claims, priority, lender negotiations, equity impairment, waivers and debt-for-equity swaps.
• Stakeholder conflict between sponsors, lenders, management, employees, founders and LPs.
• VC downside: burn rate and runway, down rounds, bridge financing, investor protections, founder dilution and shutdown decisions.
• LP reporting, fair value marks and NAV, valuation updates, write-downs, ESG, governance and stewardship.

Learning outcomes

By the end of this concept, students should be able to:

• Identify why a private capital investment has become distressed.
• Explain how capital structure affects bargaining power in distress.
• Analyse stakeholder claims and incentives in a restructuring.
• Recommend whether to inject capital, renegotiate, sell, restructure or write down an investment.
• Explain how LP reporting should reflect changing performance and risk.

Supports Course Outcomes 8, 9 and 10.

How to teach it

• Present a deal that once looked attractive but is now underperforming.
• Ask students to identify whether the issue is operational, financial, structural or market-driven.
• Map stakeholders and claims.
• Require a recommendation: amend, inject, sell, restructure or walk away.

Case-style example

BlueRiver Mobility is a PE-backed transport business. A downturn reduces EBITDA, covenant headroom disappears and lenders demand action. Students recommend a response that considers liquidity, stakeholder claims, possible asset sales, equity injection, lender negotiation and LP communication.

Where students struggle

Students often see distress as a failure outside the main course. In reality, downside management is part of private capital judgement.

Reading and a quick check

Assign a reading on restructuring, distressed investing or private capital reporting. Close by asking students to write an LP-facing paragraph that is honest about underperformance without being vague or defensive.

Where a simulation fits

The Debt Restructuring Simulation fits naturally here because it shows how leverage, stakeholder claims, negotiation and downside risk interact when the original investment case has broken down.

Where it leads

This final concept brings the course together. Students should now be able to move from fund structure and deal analysis to investment recommendation, ownership, exit and downside response.

10-week course structure

A 10-week Private Equity & Venture Capital course needs compression without losing the investment lifecycle. The safest way to shorten the course is to combine foundations with fund structure, combine sourcing with business analysis, and integrate debt capacity into the LBO and distress sessions. Do not remove VC terms, LBOs, exits or downside cases, because these are the areas where students learn the difference between describing private capital and making private capital decisions.

This is a more common shape than it looks. A nominal 12-week term often yields ten teaching sessions once a reading week and a revision week are removed.

14-week course structure

A 14-week course creates space to separate complex deal-structure topics and add more student-led application. Use the extra time for deeper term-sheet work, more simulation reflection, fuller due diligence, portfolio value creation and final investment committee presentations rather than simply adding more finance theory.

The Leveraged Buyout Simulation fits after students have studied LBO mechanics, sources and uses, debt capacity, entry price, exit assumptions, sponsor returns and downside sensitivity.

At this point, students should understand the structure of a buyout but may still treat the model as the decision. The simulation requires them to work across the deal process, interpret information, negotiate capital structure and defend the commercial consequences of their bids and terms.

Why it fits here

By the end of Session 7, students should be able to:

• Explain how a leveraged buyout is structured.
• Identify the main drivers of sponsor return.
• Assess whether a company is a credible buyout target.
• Interpret how leverage affects both IRR and downside risk.
• Recognise how lender terms, enterprise value bids and seller expectations interact.

The simulation moves students from calculating an LBO to making and defending a deal decision under competitive pressure.

What students do

Students work in teams and assume one of three perspectives:

PE firms:

Focused on valuation, lender selection, enterprise value bids, sponsor returns and the attractiveness of the acquisition.

Lenders:

Focused on debt terms, credit risk, capital structure, information requests and being selected by PE teams.

Sell-side advisors:

Focused on roadshow positioning, buyer interest, information management, bidder pressure and transaction outcome.

Deal process:

Students move through briefing, analysis, roadshow, bidding, structuring and debriefing phases.

Because the roles have different incentives, students must debate price, risk, debt terms and return expectations rather than simply optimise one spreadsheet output.

Recommended course placement

• At the end of Session 7, after the LBO lecture.
• Across Sessions 7 and 8 if the course uses the simulation as a major applied workshop.
• Before an investment committee memo so students can convert simulation decisions into written analysis.
• As a capstone for the PE half of the module before moving into exits and distress.

Running it before Session 7 would make the activity more exploratory. Running it afterwards lets the lecturer evaluate whether students can connect valuation, leverage, bid discipline and capital structure.

Knowledge students should have before the simulation

• Basic DCF and valuation logic.
• Sources and uses in an LBO.
• Enterprise value, equity value and sponsor equity.
• Debt capacity and lender risk.
• IRR, MOIC, exit multiple and deleveraging.
• The difference between a high-return model and a credible investment decision.

Delivery format

The activity can be run as a long applied class, split across sessions, or used as a structured simulation day with a separate debrief and written assessment.

Suggested debrief questions

• Which assumption had the greatest effect on your bid or return target?
• Did any team overpay to win the deal?
• Where did lender risk appetite change the sponsor’s options?
• Which capital structure created the best risk-adjusted outcome?
• How did private information, roadshow positioning or deadline pressure affect behaviour?
• What evidence would you still need before taking the deal to an investment committee?
• What did the simulation reveal about the limits of a standalone LBO model?

The Investment Banking Simulation fits after students have studied valuation, transaction rationale, business analysis and due diligence. It is not a PE/VC simulation in a narrow sense; it is a transaction-analysis bridge that helps students understand the advisory and execution environment around private capital decisions.

At this point, students should understand valuation and deal logic but may still underestimate how transaction work changes under deadlines, role-specific incentives, new information, negotiation and execution pressure.

Why it fits here

By the end of Session 9, students should be able to:

• Use valuation and financial modelling to support a transaction view.
• Interpret information from a data room or briefing material.
• Understand how buy-side and sell-side mandates create different priorities.
• Connect pitching, advisory work and negotiation to a deal recommendation.
• Explain what additional diligence would be needed before committing capital.

The simulation moves students from preparing analysis to using that analysis in a live transaction process.

What students do

Students work in teams across investment banking-style transaction mandates. The simulation involves analysis, financial modelling, strategy, pitching, negotiation, deal structuring and completion across multiple rounds.

Transaction analysis:

Teams use briefing material, data-room information and model outputs to form a transaction view.

Pitching and advisory:

Teams prepare positions, communicate recommendations and compete to secure or support transactions.

Negotiation and execution:

Teams respond to new information, confidential management information, deadlines, alerts and counterparty behaviour.

Round-based learning:

At the end of rounds, teams upload models and memos, review market dynamics and receive performance feedback.

For a PE/VC course, the lecturer should frame the exercise around the investor question: which parts of this transaction analysis would support an investment committee recommendation, and which parts still require diligence?

Recommended course placement

• After Session 5 if the course wants an early transaction-analysis exercise.
• After Session 9 as the main placement, once students can connect valuation, diligence and recommendation logic.
• Before the final investment committee memo.
• As a multi-session applied activity in a longer MSc, MBA or executive education version.

This is the longest of the simulations discussed here, so it works best when the course has enough contact time, blended delivery or a homework-supported format.

Knowledge students should have before the simulation

• Basic DCF and valuation logic.
• Comparable company and transaction valuation principles.
• Transaction rationale and advisory incentives.
• Basic understanding of buy-side and sell-side perspectives.
• How to turn financial analysis into a recommendation.

Delivery format

Suggested debrief questions

• Which part of the analysis most affected your recommendation?
• Where did your role or mandate shape what you prioritised?
• What did the model show clearly, and what did it fail to answer?
• What new information changed your position during the simulation?
• What would a PE or VC investor still need to verify before committing capital?
• How did time pressure affect quality of analysis or negotiation?
• How would you convert the simulation outcome into an investment committee memo?

Grading with the Investment Banking Simulation

The Investment Banking Simulation should be assessed as a transaction-process exercise rather than a generic reflection task. The platform records what each team submitted; combine that evidence with models, memos, pitch materials and individual debrief notes to reach your own judgement.

• Quality of analysis, modelling and valuation outputs across rounds.
• How well teams use briefing material, data-room information and confidential management information.
• Strength of pitch, advisory rationale, proposal logic and deal-structuring recommendations.
• Ability to respond to deadlines, new information, negotiation pressure and counterparty behaviour.
• Quality of uploaded models, memos or transaction recommendations where used in the course.
• Individual reflection on what further diligence would be required before a PE/VC investor committed capital.

Grading with the Leveraged Buyout Simulation

The Leveraged Buyout Simulation can be graded through role-specific performance and investment reasoning. The public simulation structure identifies PE firms, lenders and sell-side advisors, with the process moving from briefing and analysis to roadshow, bidding, structuring and debriefing.

• For PE teams: quality of valuation, lender selection, enterprise value bids and sponsor-return logic.
• For lender teams: quality of debt terms, credit risk assessment and ability to support sustainable capital structures.
• For sell-side advisor teams: quality of roadshow positioning, information management and buyer engagement.
• How well teams balance winning the deal against bid discipline and downside risk.
• Understanding of how entry price, leverage, cash flow, exit value and capital structure affect IRR and MOIC.
• Quality of the post-simulation investment committee note or assumptions defence.

Grading with the M&A Simulation

The M&A Simulation should be assessed around buyer-seller negotiation, term structuring and strategic-financial fit. The simulation places teams as acquirers or sellers and moves them through due diligence, valuation, negotiation and term agreement.

• For acquirer teams: quality of due diligence questions, valuation view, offer logic and acquirer-friendly term sheet.
• For seller teams: quality of seller positioning, response to acquirer terms and ability to protect seller priorities.
• Understanding of EBITDA adjustments, synergies, multiples, cash versus shares and term trade-offs.
• Ability to reach a deal that fits the party’s strategic and financial objectives.
• Quality of reflection on why M&A may be preferable to IPO, secondary sale or continued ownership in a PE/VC exit case.

Grading with the Initial Public Offering Simulation

The Initial Public Offering Simulation should be assessed as an exit-route and public-market readiness exercise. Students act as underwriters and investors, working through pre-IPO planning, valuation, roadshow, book-building, pricing and allocation.

• For underwriter teams: quality of roadshow pitch, valuation, price range, share-price recommendation and allocation logic.
• For investor teams: quality of demand assessment, bid discipline and evaluation of company information.
• Understanding of public-market readiness, investor appetite, pricing pressure and execution risk.
• Ability to compare IPO with alternative private capital exits such as M&A or secondary sale.
• Quality of debrief on whether the offering price, allocation and market response supported a successful listing.

Grading with the Debt Restructuring Simulation

The Debt Restructuring Simulation should be assessed as a stakeholder-claims and downside-risk exercise. Teams act as creditors or equity owners of a financially distressed company and must negotiate an agreement that keeps the company operational.

• For first-lien creditors: clarity of recovery objective, risk position and concession strategy.
• For second-lien creditors: understanding of priority, haircut risk and negotiation leverage.
• For equity teams: quality of arguments for creditor concessions and preservation of control or residual value.
• Ability to present a role position, negotiate a restructuring agreement and adapt to alerts or news.
• Understanding of how debt, equity, liquidity and stakeholder incentives interact in distress.
• Quality of LP-facing update explaining what went wrong, what agreement was reached and what the fund should learn.