VENTURE CAPITAL

AND PRIVATE EQUITY

A Casebook
Fourth Edition

Josh Lerner
Harvard Business School
and
National Bureau of Economic Research

Felda Hardymon
Harvard Business School

Ann Leamon
Harvard Business School

WILEY
John Wiley & Sons, Inc.
Table of Contents

INTRODUCTION 1
1 Private Equity Today and Tomorrow 1
2 Tad O'Malley: December 2004 13

MODULE 1: VENTURE CAPITALAND PRIVATE EQUITY 29

3 Yale University Investments office: August 2006 34
4 Pawson Foundation: August 2005 59
5 Note on Private Equity Partnership Agreements 72
6 Grove Street Advisors 83
7 A Note on Private Equity Fund-Raising 112
8 Gobi Partners: Raising Fund II 119

MODULE 2: VENTURE CAPITAL AND PRIVATE EQUITY " 141

9 Adams Capital Management: Fund IV 146
10 Tad O'Malley: June 2005 , 165
11 Portfolio and Partnership 183
12 Metapath Software: September 1997 ;. 194
13 A Note on Private Equity Securities . 206
14 Brazos Partners and Cheddar's Inc. 214
15 A Note on Valuation in Private Equity Settings 238
16 Lion Capital and the Blackstone Group: The Orangina Deal 259
17 A Note on European Private Equity 279
18 SAIF: May 2004 292
19 A Note on Private Equity in Developing Countries 321

MODULE 3: VENTURE CAPITAL AND PRIVATE EQUITY 339

20 Warburg Pincus and emgs: The IPO Decision (A) 343
21 Motilal Oswal Financial Services Ltd.: An IPO in India 363
22 A Note on the Initial Public Offering Process 382
23 Between a Rock and a Hard Place: Valuation and Distribution
in Private Equity ^ 389

vu
viii Table of Contents

MODULE 4: VENTURE CAPITAL AND PRIVATE EQUITY 417

24 Village Ventures 424
25 3i Group pic: May 2006 448
26 Actis and CDC: A New Partnership 472
27 Best Practices: Decision Making Among Venture Capital Firms 495

Appendix: Note on Private Equity Information Sources 509

Glossary 531

Index 539