By Claudia Capos

Nine University of Michigan student teams squared off against each other on December 11 during the annual private-equity “battle of the pitches,” held by the Center for Venture Capital and Private Equity Finance, or CVP, at Michigan Ross.

Two teams were selected as semi-finalists by a panel of private-equity judges and advanced to the now-famous “Bake-off” finals. Only one team emerged as this year’s winner to claim the 2018 Alan Gelband Private Equity Award and a major share of $10,000 in prize money.

“We came up with a winning strategy,” said Jonathan Keltner, MBA ’19, a member of the first-place team, which proposed a private-equity acquisition of Gaming Partners International Corporation, or GPIC. “We chose a very stable company with tremendous growth opportunity. We also identified real-life financial backers, including a hedge fund and a private individual, who told us they are willing to back the deal.”

Keltner and his fellow team members ─ Andrew Wills, PTMBA ’19, Mike Szuma, PTMBA ’19, and Ryan Schell, MBA ’19 ─ received the first-place prize of $7,500.

The second-place runner-up team, which pitched a public-to-private buyout deal for Nobilis Health, was awarded $2,500.

“We took a chance on a public company that was not an obvious takeover candidate,” explained Bryan Lin, MBA ’19. “We dug deep into the fundamentals and felt we could turn the company around.” Alena Golovchenko, MBA ’19, said the team conducted extensive research as part of its strategy to “understand what could make this company valuable” to potential private-equity investors.

Juan Canizares, MBA ’19, attributed the team’s success in reaching the semi-finals to its ability to tap into the diverse knowledge and experience of its members, who have backgrounds in law, accounting, private equity and business consulting. Others on the team, including Adrian Juarez, MBA ’19, Ada Shelegova, MBA ’19, and Neil Tiwari, JD ’19, agreed that the opportunity to take a deep dive into health care, a field they knew nothing about, was a great learning experience.

David J. Brophy, University of Michigan Ross Zell Lurie InstituteThe yearly private-equity public-to-private pitch competition, culminating in the Bake-off, serves as the capstone event for MBA and U-M graduate students enrolled in Professor David Brophy’s Private Equity Finance course.

At the beginning of the fall term, Professor Brophy assigned the nine student teams to select and evaluate a middle-market public company for a possible “model” private-equity acquisition. The students used publicly available financial records to assess the company’s management, revenue, profits and market position, and, subsequently, to project the estimated return on investment for private-equity investors. Based on this extensive information gathering and financial analysis, each team formulated a buyout pitch for the target company it had chosen.

“Alan Gelband, an alum and great friend of U-M Ross, joins us in facilitating student access to opportunities in the private-equity and alternative-investment field,” Professor Brophy said. “Graduates of this and other CVP courses and competitions are now private-equity fund leaders globally and providing continued support for our programs and conferences.”

Gelband, BBA ’65, MBA ’67, the benefactor for the long-running Gelband Merit Scholarship, said he was impressed by the quality of the students’ investment presentations.

“They did a good job of relating to the real issues that arise in taking a company private,” he remarked. “They presented a clear picture and valuation and thought through what they would do to improve the company. Finally, they proposed how they would realize the investment gains. There’s not that much difference between the product the students created here and the product that I see professionals create out in the industry.”

Gelband credited Professor Brophy for his unwavering dedication to teaching Michigan students and preparing successive generations for rewarding careers in finance and investment.

“This is my 13th year with David at the Bake-off and my 25th year of sponsoring the scholarship,” said Gelband, the founder and managing director at Gelband & Co. investment banking. “David has done a terrific job.”

During the Bake-off award presentation, Gelband announced he was changing the name of the annual scholarship to the Brophy-Gelband Merit Scholarship in honor of Professor Brophy and in recognition of his contributions to education.

Preparing Next-Generation PE Investors

This year’s roster of 12 Bake-off judges included PE investors from regional and national private-equity firms. As in the past, many individuals were Michigan Ross graduates and CVP alumni, or had strong ties to the University of Michigan.

One judge recalled going through Professor Brophy’s Private Equity Finance course while he was a graduate student at the University of Michigan.

“The experience of focusing on a real-world company, making a decision to take it private and then defending your decision in front of a judges’ panel of professional investors is rare,” said Jason Jarjosa, a partner and manager of Bloomfield Capital, who received his BBA and MBA from Michigan Ross. “It’s one of the things I remember most about business school. Dr. Brophy had such a major impact on me and on my understanding of the private-equity business.”

Bryan Berent, managing partner and co-owner of Blue River, said the judges’ critiques of the students’ public-to-private pitches can help to prepare them for future jobs in the investment industry. “All of us on the judges’ panel have been through the mergers-and-acquisitions process, so we can provide real-world feedback,” he commented. “Our company, Blue River, is growing and recruiting, so that’s also an important consideration.”

First-time judge Chad Salsbury, a managing director of Adamy Valuation, said he looked forward to learning new things from the student teams as well as providing them with his professional insights. “This competition is an opportunity for the students to put their academics to the test by taking complex ideas, distilling them down, and then presenting them to the judges,” he remarked.

For the graduate students in the class, the annual “battle of the pitches” represents both a culmination of their business school education and a springboard into the professional world.

Maria Klots, MAcc ’19, said she plans to return to PricewaterhouseCoopers where she previously worked on the company’s advisory deals practice. “One of our clients is a private equity firm that is looking to make acquisitions, so I wanted to get a better understanding of the PE space,” she said.

Casey Spitzer, JD ’18, said he intends to move to New York after graduation and begin a legal career with a focus on M&A transactions. “I thought Professor Brophy’s course would give me insights into what private-equity clients are thinking, so I can appropriately represent them,” he remarked.

Omer Rotem, MBA ’19, an exchange student from Tel Aviv, worked as the CFO of a startup company before entering Michigan Ross, and plans to return to Israel to resume his career in startups or venture-capital investment. “This course gave me a holistic perspective on the entire cycle a company goes through, from early life to acquisition to exit,” he said.

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