SBIC_Private_Equity_Training_SOW.pdf

SBIC Private Equity Training Page 1 of 3 Requirements and Statement of Work

Statement of Work for Private Equity Training for the Office of Investment and Innovation’s Small Business Investment Company Program

1. Introduction

1.1 Scope

This statement of work (SOW) describes the requirements for private equity training to support the Office of Investment and Innovation’s (OII) oversight and administration of the Small Business Investment Company (SBIC) program.

1.2 Background

SBICs are private equity funds that use privately raised capital and SBA-guaranteed leverage to finance small businesses seeking growth capital. Although the private equity industry is large, SBICs typically participate in the lower end of the market in deals under $25 million in deal size. As of June 2018, the SBIC portfolio included 301 SBICs, of which 189 held Debenture leverage or commitments totaling $14.7 billion

The SBIC portfolio consists of many different private equity investment strategies, including approximately 60% mezzanine financing, 20% buyout and 20% senior/other creditor. Included within those strategies is a healthy mix of equity investment, which encompasses 15%- 20% of the overall portfolio.

The private equity industry has experienced substantial growth over the past ten years, with fund raising reaching an all-time high of $750B in 2017. The SBIC Debenture program has also experienced tremendous growth over that time frame, due in part to the financial crisis of 2008. The resulting credit crunch led private equity management teams to seek low cost leverage through the SBIC program. Debenture SBIC applicants sought SBA’s inexpensive SBA-guaranteed leverage to provide loans to small businesses that may have been financed by traditional banks in other times. Prior to 2008 (FYs 1995-2007), Debenture SBICs provided over 18% of their capital in the form of equity, 46% in mezzanine debt, and 36% in straight loans. For the five years following the financial crisis (2008-2013), Debenture SBIC financings were 12% in equity, 33% in debt, and 54% in straight loans.

Another factor supporting the growth of the program was the American Reinvestment and Recovery Act of 2009 (Recovery Act), which increased the amount of leverage available to Debenture SBICs to $150 million and the amount of leverage available to SBICs under common control (typically managed by the same fund manager) to $225 million. As a result, more SBICs entered the program with higher private capital in order to access the higher leverage maximums. Between FYs 2005 through 2009, the Small Business Administration (SBA) licensed 44 Debenture SBICs with initial private capital less than $1.4 billion. For the five FYs following the Recovery Act (2010-2014), SBA licensed 119 Debenture SBICs with $4.5 billion in initial private capital. In December 2015 Congress increased the maximum leverage for SBICs under common control to $350 million.

Along with higher capital levels, the SBIC program has seen an increase in the sophistication of the management teams receiving SBIC licenses and in the investment strategies being deployed, such as the trend to unitranche financing.

SBIC Debenture Program Subsidy Model Page 2 of 3

2. Specific Requirements

2.2 Private Equity Training Agenda

The Contractor shall develop and submit to OII for approval a comprehensive training agenda on the private equity industry covering a broad spectrum of topics related to the functioning and operations of the private equity industry and private equity investment funds. To the extent possible, Contractor will work with OII to customize the training to meet the unique needs of the SBIC program. Training should cover the following areas:

Overview of the private equity industry Structure and economics of private equity funds Legal aspects of private equity funds Selecting private equity fund managers Due diligence Benchmarking and monitoring private equity funds Accounting and reporting for private equity funds Best practices in private equity fund selection, monitoring and reporting

2.2 Private Equity Training Program

The Contractor will provide on-site training program consistent with the agenda developed on Section 2.1.

Training must include speakers/presenters with relevant private equity experience and provide an interactive learning environment to include course materials that can serve as reference materials for participants post training.

2.3 Training Feedback

The Contractor will survey training participants about the content and usefulness of the training program, to identify areas of improvement, and to solicit suggestions for future training ideas.

3. Deliverables

SOW

Paragraph/ Deliverable

Format Due Date

2.1 Proposed training agenda (2 hard copies plus

electronic copy in Microsoft Office application.)

30 days after contract award

2.1 Final training agenda (2 hard copies plus

electronic copy in Microsoft Office application.)

NLT 30 days before date of On-site training

2.2 First On-site Training session

Second On-site Training session

Within 180 days of contract award

Within the second 180 days of contract

2.2 Presentation Materials (up to 30 copies plus

electronic copy)

At on-site training program

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2.3 Training feedback (two hard copies plus

electronic copy in Microsoft office application and/or PDF)

Within 7 days of each training session

4. Travel & Meetings

The Contractor shall meet with OII as necessary to understand the SBIC program and to develop a training agenda that suits OII’s requirements. All meetings will take place at SBA Headquarters in Washington, DC, unless otherwise specified or agreed to by SBA.

Initial Meeting. The Contractor will meet with OII within 2 weeks after contract is initiated.

Future Meetings: As needed to finalize training agenda and preparations. Meetings may also be held telephonically.

5. Government Furnished Information

The SBA will provide the following government furnished information:

SBIC Program Information which may be found at www.sba.gov/inv;

Access to key personnel for interviews, information and clarification;

Other OII data relevant to this project as needed.

6. General Information

6.1 Security: N/A

6.2 Place of Performance

The Contractor shall perform the duties listed in this statement of work at the Contractor’s office or SBA Headquarters and supply all necessary equipment and information needed to accomplish these tasks. As necessary, the Contractor shall attend meetings at SBA Headquarters, located at 409 3rd Street, SW, 6th, Washington, DC 20416 to support those tasks identified in section 2.

6.3 Period of Performance

12 months from contract award.