Going Private: Students Learn Valuable Lessons
Ross students identify public firms that hold promise of generating significant value for private equity investors.
ANN ARBOR, Mich.—A six-member team of graduate students has won the latest round of the Michigan Private Equity Investment Competition at the Stephen M. Ross School of Business.
The winning team consists of MBA students David Kase, Vishaal Rana, Rachel Weingrad, Chris Wolohan and Xu Yao, and engineering student Raj Pandravada.
The competition, which is in its third year, challenges Ross students to identify public firms that hold promise of generating significant value for private equity investors. The top two teams in the contest share $10,000 in prize money.
Fifteen teams from Professor David Brophy's private equity finance class searched out companies that represented compelling public-to-private plays. They analyzed the firms' financial performance, operational strengths and weaknesses, corporate culture, management and competitive position. And each team used its research in a formal buyout proposal that consisted of detailed analyses, an investment thesis and a recommended capital structure for the deal.
Recently, two finalist teams made formal presentations to a group of private equity and venture capital professionals assembled by Brophy, director of the Ross School's Center for Venture Capital and Private Equity Finance. Members of the winning team, which proposed buying a Kansas-based cement company, split the $7,500 top prize. The runners-up recommended a buyout of a hydraulic valve manufacturer in Florida and received $2,500.
Two Michigan alums have been instrumental in the Private Equity Investment Competition from its inception—David Evans, chairman of Chicago-based Glencoe Capital (www.glencap.com), and
Alan Gelband, president of New York investment-banking firm Gelband & Company (www.gelband.com).
The student teams are directed to develop proposals that would be a good fit for Evans' firm—and he is deeply involved in scrutinizing and evaluating their pitches and underlying assumptions. Gelband provides the competition's prize money—from a business school scholarship he established 15 years ago.
The participants said the competition provided an invaluable hands-on lesson in business analytics, finance strategy, deal execution and devising and defending a business plan.
"It's the most practical class you could have," said MBA student Brian Stearns, a member of the second-place team.
Pandravada said the project provided students significant experience in research and analysis.
"I learned the value of information…and teamwork," he said. "It's been extremely valuable. I hope to (work in private equity) in a couple years."
That's music to Brophy's ears.
"We're trying to get young people geeked about working in this direction," he said. "It's a springboard. The private equity market is enormous globally. This is what's going on in the country and the world today. It's a business model that's finally getting wide and broad acceptance."
Investment industry veteran Gelband, meanwhile, was impressed by the teams' performances.
"I was really knocked out by the presentations," he told the group. "You guys have learned a lot. Stay true to your passions. Stay true to your integrity and you'll have good outcomes."
Written by David Wilkins
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