Inside Private Equity by Bill Ferris

Inside Private Equity by Bill Ferris

Author:Bill Ferris
Language: eng
Format: epub
Tags: BUS000000, book
ISBN: 9781743433690
Publisher: Allen & Unwin
Published: 2013-01-20T16:00:00+00:00


Study Group International

I ask you not to begin this story without first reading the Education and Training Australia (ETA) case in Part One. Our nerve-racking experience and ultimate success with the earlier ETA investment gave us the ‘special angle’ we always like to have when considering any new investment opportunity.

What is a ‘special angle’? In private equity, compared to public equity, you are often dealing in imperfect information marketplaces free from the continuous disclosure requirements of stock exchange regulators. Nor does the seller necessarily take the highest cash price he is offered since there may by other benefits important to him, such as the likely impact on family members and employees, customers, intellectual property and reputation.

In this instance, we already knew the nucleus of Study Group International’s embryonic cells, ETA. And we knew and highly regarded the man we found to run ETA, Arvid Petersen. Arvid had continued to successfully build ETA after we sold out to the London Daily Mail Group (LDMG). Predictably, Arvid continued to expand the rebadged Study Group International (SGI) business into Europe and the United States. He did a great job for the publicly listed LDMG and they in turn were very constructive and expansion-oriented owners. Nonetheless, SGI was never really a core part of the LDMG enterprise, and we always thought it might one day come back on the market. Arvid thought so too!

Arvid had stepped out of the CEO role at SGI and later resigned from the board so that he could join CHAMP when the SGI business came up for sale in late 2006. Arvid was our ‘special angle’ in the bid process; with his knowledge and with our confidence in his judgement we were positioned to move speedily and aggressively. We were able to convince the vendor that we could and would complete a transaction efficiently. We were not the highest bidder but we were the best and most knowledgeable one.

Our CORE PROPOSITION was straightforward. This was a business and a sector we knew. SGI enjoyed a leading presence in the three English-language countries most attractive to students from the developing nations of China, India, Indonesia and others. SGI’s teaching facilities in the United Kingdom, Australia and the United States positioned it to offer offshore students a choice of foundation courses as gateways into university degree courses in the most sought after Anglophile destinations in the world. We believed the demand for higher margin products could in fact prove almost insatiable, and we were confident this private education business would prove to be a hotly contested sector for investors.

Next, the KEY PEOPLE. Ben Sebel, now a shareholder and a managing director in CHAMP, was our project director for the SGI deal. Back in the early nineties, Ben had been seconded by his then employer, Deloitte Tohmatsu, to work as an analyst assistant to Nick Greiner, former premier of New South Wales and then chairman of ETA. In that role Ben became intimately familiar with the ETA company. Ben subsequently completed his MBA at Harvard and joined Goldman Sachs in New York.



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