The private equity industry has been in a continuous state of evolution since its inception. From the days of leveraged buyouts and hostile takeovers to the current boom of venture capital and impact investing, today's business leaders are expected to know every facet of the industry, inside and out.
Enter Columbia Business School's Private Equity Program, an unparalleled network of CBS alumni, faculty, private equity professionals, and other members of the business community. The program, launched in 2007, bridges the gap between academic theory and leading practitioners in the private equity industry through research, events, and courses.
Thanks in part to its ever growing and accomplished alumni network, as well as experienced faculty members, the program is consistently on the cutting edge of the private equity industry, providing students with an unrivaled look into an industry that is only growing.
It Starts in the Classroom
Setting up students for success in the private equity industry starts with a solid overview. To give students this foundation, CBS offers a variety of private equity courses, such as Mergers and Acquisitions. The newest course among them, however, is Private Equity Finance, aimed at giving students an insider's view of the essential aspects of corporate finance relevant to the private equity industry.
Taught by Michael Ewens, the David L. and Elsie M. Dodd Professor of Finance, the course equips students with flexible skills designed to serve them throughout their careers, while also providing a state-of-the-art view of the current industry.
“If you had to pick one option in finance that was the most adaptable and dynamic, it's fair to say that private equity in the alternative asset space is the place to be,” says Ewens.
Unlike traditional financiers, who work in environments that can be stagnant and reactive, private equity professionals are constantly asked to create new solutions to challenges such as deal structuring or funding negotiations, he says.
“Private equity is built to adapt to change,” adds Ewens, who also serves as co-director of the Private Equity Program alongside Professor Donna Hitscherich, a senior lecturer of finance and a faculty leader at the Sanford C. Bernstein & Co. Center for Leadership and Ethics.
Ewens explains that the curriculum's unique format gives students a leg up in the industry. Mirroring the industry-standard private equity cycle, a series of six modules takes students through selection, valuation, and harvesting fundamentals. Students begin by learning the structure of private equity firms, the sources of value-add, and how to evaluate a target company, all while taking into account the needs of investors and management.
The class consistently hits on two themes. First, that investors in private equity firms—limited partners that include endowments, pension funds, insurance companies, and family offices— have demands for the funds they invest in. Second, students must constantly ask why potential buyout targets do not implement the changes brought by private equity investors themselves. In the next part of the class, students tackle funding negotiations, deal structuring, and valuation. Throughout, students are working with the leveraged buyout financial model to evaluate deals.
Once students grasp valuation and deal structuring, later modules cover regulatory frameworks that govern the private equity industry. After learning about closing a buyout transaction, the students take on a critical perspective: private equity as business owners. Here is where the private equity investor's company ownership allows for implementation of value creation plans.
Juliana Anderson '15
The course's assignments build up to a final project that bridges the gap between the classroom and professional work. Students find a publicly traded company and prepare an investment committee memo for a take-private transaction, acting as hypothetical investment professionals in the class' “PEF Partners” fund.
Students who complete the course can expect to have a deep understanding of the major players in the private equity industry, as well as the ability to evaluate investment opportunities and write an investment thesis. They will also be able to build valuation and capital structure models for leveraged buyout deals, weigh the pros and cons of different exit opportunities, and articulate the drivers of value creation provided by private equity ownership.
“My job in the classroom is to help address the what and the why. The guest speakers provide the how of private equity.” - Michael Ewens, the David L. and Elsie M. Dodd Professor of Finance says.
Learning from the Industry's Best
The new curriculum would not be complete without students learning from CBS alumni who have conquered the private equity field. Guest speakers featured in the classroom allow students to draw a straight line from theoretical classroom knowledge to industry case studies, explained by the private equity professionals who were actually involved in closing the deal.
“Beyond traditional due diligence and the underwriting process, an important part of working on any private equity transaction is developing strong alignment with management teams on value creation plans, supported by appropriate governance and incentive structures, in order to ensure all stakeholders are aligned and can benefit from success,” guest speaker Elliot Feldman '16, senior vice president at Cerberus Capital Management, told students during a Private Equity Finance class.
In addition to Feldman, guest speakers in the class included Diego Donoso '12 (Apollo), Juliana Anderson '15 (Tailwind), Evan Einstein '19 (L Catterton), David Spiller '06, Michael Shmulevich '20 (Cerberus), Kate Hastings '09 (Welsh Carson), and Bruce Douglas '91 (CEO, EducationDynamics).
After a speaker presents an anonymized version of a deal, students are asked to write their own case memo with responses to the topic and how they would recommend the deal be approached. Additional assignments include work on investment selection and valuation.
“The alumni have the experience with the School and understand the unique way the School fits into the PE industry,” says Ewens, who adds that the guest speaking component opens the door for important interactions between students and nine CBS alumni.
Research and Practical Applications
In late February, CBS invited PhD students and faculty to its second Columbia Private Equity Conference. The two-day gathering of academics was organized by Ewens and Assistant Professor of Business Emmanuel A. Yimfor. The first day of the conference featured a PhD workshop, while the second day saw the presentation of five papers on contemporary research related to private equity, venture capital, and entrepreneurial finance. Academics from universities around the world, including Harvard Business School, Wharton, the London Business School, and the Frankfurt School of Finance & Management, were also in attendance.
The Private Equity Program, in collaboration with the School's Executive Education program, also hosts Deal Camp. The interactive, multiday learning event features presentations and panels moderated by CBS faculty. Attendees learn the fundamentals of private equity, from deal sourcing and fund formation to leveraged buyouts and the role of venture capital. Additionally, the program builds on CBS's course curriculum, teaching attendees through hands-on case studies and giving them the opportunity to network with established industry professionals.
The Birthplace of Private Equity
While CBS's private equity curriculum might be new, the School's connection to the industry goes back decades.
In May 1976, CBS alumnus Henry R. Kravis '69, then a partner at Bear Stearns, co-founded Kohlberg Kravis Roberts & Co. with George Roberts and mentor Jerome Kohlberg. Kravis would go on to serve as KKR's co-CEO alongside Roberts. Kravis has served as the company's co-executive chair since 2021.
KKR wrote the script for private equity strategy in the latter half of the century, specializing in multiple alternative assets and leading the leveraged buyout boom of the 1980s. Today, KKR is known as one of the largest and most successful private equity firms in the world.
The School's Private Equity Program solidifies this decades-long legacy, placing it at the forefront of the industry's research while also bridging the gap between academic instruction and real-world experience. Currently, the program has a roster of 200 alumni mentors who regularly meet with students, including at weekly breakfast events. This gives students the opportunity to meet and learn firsthand from industry practitioners, giving them an important professional network on top of the skills learned in the classroom.
The Private Equity Program also hosts an annual Diversity, Inclusion, and Innovation Competition alongside KKR. The competition challenges students to identify and pitch a company as a leveraged buyout candidate. Finalists have the opportunity to present their findings to an investment committee composed of KKR executives.
“PE was born here,” Ewens says, “so it means a lot that the course is being taught here.”
