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GLENCOE CAPITAL AND MICHIGAN'S ROSS SCHOOL OF BUSINESS ANNOUNCE WINNERS OF 2nd ANNUAL PRIVATE EQUITY COMPETITION
Equity Firm Helps University of Michigan B-School Students Think Like Investors
(May 1, 2006) Chicago-based buyout firm Glencoe Capital and the Center for Venture Capital and Private Equity Finance at the University of Michigan's Stephen M. Ross School of Business have announced the winners of the 2nd annual Glencoe-Gelband Private Equity Investment Competition at the Ross School.
This year's winning team includes students Ted Aronson of St. Louis, Mo., Alex Cedro of Warren, Mich., Richard Chen of Shanghai, China, Erik Franks of East Tawas, Mich., Steven LaBarre of Brighton, Mich., Ted Omlid of Minnetonka, Minn., and Andy Tai of Singapore.
The Glencoe-sponsored competition, inaugurated last year in Dr. David Brophy's private equity finance course in the Ross School, allows student teams to compete for the chance to make their case to Glencoe about investing in a public-to-private transaction with a company of their choosing.
"To succeed in this competition, students have to analyze and plan like buyout investors, and this year's winning team showed a terrific grasp of what drives value in a buyout situation," said David Evans, Chairman of Glencoe Capital.
"Students couldn't ask for a better opportunity to learn about how buyouts are considered and deals executed," said Dr. Brophy, who has taught private equity and venture capital investing at the University since 1983. Brophy is also Director of the Center for Venture Capital and Private Equity Finance at the Ross School.
The competition carries with it the annual $10,000 Gelband Scholarship prize from the University of Michigan and Ross Business School alumnus Alan Gelband, president of New York investment-banking firm, The Alan Gelband Company. Winning team members split the $7,500 top prize and runners-up split $2,500.
"My hope is to create opportunities for students to think like private investors—and to learn how the stock market really works," said Gelband. "This competition gives students experience in the way private equity people think."
Teams competed head-to-head to find a public company with the potential to generate wealth if it were acquired and turned private. The top two teams then had the opportunity to present their ideas directly to Glencoe Capital's Evans and the firm's Investment Committee.
"Successful candidates for a public-to-private play are often profitable but stagnant," said Evans, who attended the University of Michigan as an undergraduate before earning his MBA at the University of Chicago Graduate School of Business. "We invited students to find companies with a clear path to revitalizations—such as by overhauling inefficient manufacturing processes or repositioning an underachieving product."
In their search for a promising company, Brophy's students pored over corporate reports, sifted through financial data, and evaluated companies' cultures, operations, and management, as well as their competitive strengths and weaknesses.
Each team then identified a target company, analyzed financials, developed a thesis, and proposed a capital structure for the deal. Teams submitted detailed proposals before making preliminary presentations to a judging panel in mid-February.
"After working in mergers and acquisitions for the last four years, I was very interested in learning how private equity investors sourced, evaluated, and structured investment opportunities," said winning team member Erik Franks. "This competition provided insight into all of that and more. It's been one of the best learning experiences with real-world applications I've had at The Ross School," Franks added.
"The most valuable part of the competition was identifying LBO targets and learning how to optimally structure and finance potential deals for private equity firms," said winning team member Ted Omlid, who will graduate in the fall of 2006 and will join JP Morgan Securities in New York as an associate.
"Presenting to Alan Gelband and the investment committee of Glencoe was an amazing experience," added Alex Cedro. "It was like stepping into the shoes of real professionals and going through the entire private equity process, from due diligence and analysis to pitching an idea in front of a legitimate committee of investors." Cedro, who graduates in May, will join the Global Technology Group at UBS Investment Bank in San Francisco.
Glencoe, a private merchant bank managing approximately $1 billion in alternative investment assets, is committed to programs that help students better understand equity investing. The firm also provides sponsorship funding to support the Glencoe Capital Chicago GSB Internal Venture Capital Investment Competition (VCIC) at the University of Chicago's Polsky School for Entrepreneurship.
"At Glencoe, we believe strongly in affording students the opportunity to learn from a real-life experience," Evans said. "These students learned what it's like to go in front of an investment committee. I don't know how you get better preparation than that."
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