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Spreadsheet Supplement for case 806069

Randall Fojtasek, a partner at Brazos Private Equity Partners, must decide whether to invest more money in Cheddar's restaurant chain, which the firm invested in 10 months earlier. The incremental investment would fund a real estate subsidiary that would own the property on which Cheddar's built its stores, rather than its traditional approach of sale and leaseback. As he considers the issue, Fojtasek must decide how to price the new stock, how to structure the deal to limit his firm's dilution, and how to manage the personality issues involved.

Tad O'Malley, a new associate at Empire Investment Group, a top-tier leveraged buyout firm, must evaluate three different deals and recommend which should receive additional resources for further investigation. He must consider the specifics of each company and each deal as well as the resources or restrictions of the firm's offices that would handle the project.

Christo and Jeanne-Claude, the artists who created The Gates in New York City in 2005, are trying to decide how best to finance their next project. Over the River, a project to drape sections of the Arkansas River with translucent fabric is a very different enterprise from The Gates. Bank Leu, the Swiss back that had provided a line of credit for The Gates, has declined the opportunity to participate in Over the River. As Christo and Jeanne-Claude review the Bank Leu vehicle, they must consider whether it is replicable to other projects and institutions or whether they should consider a different approach.

The partners of Adams Capital Management must decide whether to start their fourth fund in early 2006 or to hold off until they have realized more exits from the earlier funds and have proved the viability of a recent change in strategy.

Tad O'Malley, a second-year student at Harvard Business School, must choose among three offers from private equity firms. Each firm presents a unique combination of history, culture, and compensation. Traces Tad's strategy in obtaining these offers and lets students decide which he should accept.

A top-tier venture capital firm has encountered challenging conditions for its recent funds, which have raised "clawback" liabilities. In response, it is charging its investors the difference between the lower budget-based fee that it used and the maximum that the investors might have had to pay. A vice-president of a foundation invested with this firm must decide whether to reinvest in the firm's newest fund.

For the past two decades, say economics professor Adam B. Jaffe and business professor Josh Lerner, U.S. patent laws have gummed up the gears of innovation.

Describes investment decision-making processes, based on interviews with 56% of the top 38 venture capital firms in the country. Discusses some implications for the future growth of the industry.

A venture capitalist faces a situation in which a struggling portfolio company has found a promising vice president of sales through a recruitment agency. The candidate would be an excellent fit for another one of the investor's companies--one that is doing much better. Yet, that firm has not embarked on a formal search.

Supplements the (A) case.

Spreadsheet Supplement for case 204055

In 2002, Apax Partners had to decide whether to accept a less-than-perfect offer for one of its portfolio companies or to refinance it. This company, a maker of paper industry consumables with a global presence, had been purchased in 1999 and performed extremely well since then. Despite being a solid, cash-generative operation, it didn't excite a lot of interest in the market. An early exit at a good multiple would be helpful for Apax's current fund and future fund-raising efforts, whereas refinancing would allow Apax to take some money off the table and share in future upsides. Which is the better choice?

The Central Intelligence Agency establishes a venture-enabled fund, In-Q-Tel, to allow it to access cutting-edge technologies. Fund managers face a variety of difficulties, some similar to those facing other institutionally affiliated venture funds and some unique.

Describes the dilemma facing Chris Masterson, the head of HSBC's private equity division, in negotiating this team's buyout of its organization from HSBC, its corporate parent since 1992. Discusses the pros and cons of being a captive fund and the delicate balance among many interests--limited partners, team members, the parent, and the investee companies--that must be maintained.

David Fischer is trying to raise $200 million for a first-time venture debt fund that will be affiliated with Silicon Valley Bank, a major technology lender. Despite his lengthy experience in venture lending, the process is proving difficult. He and his partners are considering whether to continue trying to raise the full amount or to close a smaller sum that is readily available and prove the model before trying to raise a larger fund. In making their decision, the partners must consider the structure of the fund and the value added by their links to the bank as well as how to counter conflict of interest concerns raised by the potential limited partners.

Grove Street Advisors, a manager of customized private equity investment products, has been very successful in its first five years. To grow, the group must decide whether to target smaller organizations, revive its coinvestment efforts, or enter the highly competitive fund-of-funds market.

The Yale Investments Office must decide whether to continue to allocate the bulk of the university's endowment to illiquid investments--hedge funds, private equity, real estate, and so forth. Considers the risks and benefits of a different asset allocation strategy. Highlights the choice between different subclasses, e.g., between venture capital and leveraged buyout funds.

Paul Fletcher, CEO of CDC Capital Partners, a private equity group investing in the world's poorest countries, is wrestling with questions raised by the imminent reorganization of the firm. Previously an arm of the United Kingdom's international aid agency, CDC is becoming a public-private partnership, which requires that it refocus its efforts and rearrange its widespread portfolio into a form that outside investors will recognize. The proposed organization, separating government money from fund management, appears to solve a number of the problems from a strategic perspective, yet a host remain. Given the generally poor risk/return ratio of emerging market investing over the past decade, Fletcher and his executives must decide how they can position their organization to compete with other investment vehicles and still remain true to the mission of mobilizing capital to invest in poor countries.

Brian Larcombe, CEO of 3i Group, one of the world's largest private equity firms and one of the few publicly listed ones, is deciding how best to use his firm's international network to deliver superior returns to shareholders. This case presents 3i's history and international strategy.