Justifying a Case Study
For a buyout PE firm's case study - I was provided 5 publicly traded companies, asked to pick one, and do a write up around why I'd invest in the company (as a take private).
4 day timeline. VP / Senior associate level role.
What is the most efficient way to figure out which company I should research and do the write up on?All 5 companies are in the same industry and size range.
Just an intern but here's how I'd attack it (would really appreciate feedback).
1) You're gonna need to know the business models and high-level financials of all five companies (I assume) in order to talk about why one vs the others anyways, so start there. When pulling together the info on that I'd prolly look for a) competitive advantages b) historic cash-flow stability c) EBITDA margins. If they are software companies, what are their subscription models and how sticky are they for their client's tech stack? If they are fast food companies, which ones have franchises? If the firm you're interviewing for likes role-ups, which one would be a good platform (manufacturing capabilities, etc.)?
2) From there it would probably be good to get a sense of relative valuations.
3) With all that, I'd then holistically consider valuation, comp advantage/business model (including portfolio fit), and financial performance (cash flows and ability to improve margins).
Is one undervalued and has low EBITDA margins but stable cash-flows? Sick, you could propose to buy is, slash EBITDA, focus on developing comp advantage, etc.
It probably isn't that straight forward, they wouldn't give you an obvious "right" answer, but my thinking is that once you have a sense of those three areas for each you can come up with a robust foundation for arguing for one and then justify a super deep-dive.
Would really love to PM to talk more abt it if you're cool with that. Would appreciate the chance to hear how someone in the industry thinks abt it.
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