Maclean Palmer Case Study Essay
1. Evaluate Palmer and his decision to create a new venture capital fund.
Maclean Palmer and 4 partners are about to quit their jobs and move to Boston with their families to begin crafting an offering memorandum for a private equity fund.
• Private equity is an asset class consisting of equity securities in operating companies that are not public trade on a stock exchange.
• Private equity investments are primarily made by private equity firms, venture capital firms, or angel investors, each with their own set of goals, preferences and investment strategies.
• The most common investment strategies in private equity are: leverage buyout, venture capital and mezzanine capital.
The …show more content…
• Introduction discussion of fund strategy
• Firm operating philosophy
• Review draft budget
• Discuss of fundraising strategy
• Open issues for the team
• Next steps
Palmer set up his fund (venture capital) “Investment opportunities for private equity” based on the following strategy:
• Ranking list of experienced minority executives
• From old fashioned way, finding back great managers, invest in fundamentally sound business.
My evaluation of the team is a potential team for bringing success. Palmer had investigated dozens of potential minority candidates. For forming and building teams, Palmer searched out people based on what the opportunity required and when so, he had four partners who had different experiences and skills to fill the gaps of the team. The fit concept is central to anticipating management gaps and building the team. Palmer had set an agenda for first meeting to introduce and discuss about strategy.
3. Assume you are an analyst with a pension fund or other institutional investor who is evaluating the team as a prospective Limited Partner. What are the major risks here and what questions would your due diligence address?
There are major risks when evaluating the team as a prospective Limited Partner to be considered such as:
- Not attract to Limited Partners due to no track record
- Teams can create a diversity skill and