Hello, quick question for those in PE regarding lbo models. Beliee there are typically 4 cases: 1) Management 2) Upside 3) Base 4) Downside
Just wanted to get some thoughts on what the difference is between Mgm't vs. Base. Would have thought they are identical.
Thank you all!
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Management = Upside (generally) Base = Management if you believe your management team is very conservative - e.g. historically consistent growth, easy synergies, etc. etc.
Usually the Base case has inferior IRR to management because it dials back growth and cost cutting assumptions.
$GBSN ouch
Management case might have some assumptions you don't agree with (see QoE adjustments), and you would adjust for those in one of your case.
Management might be base or best case depending on whether they are conservative, as mentioned above
1) Management - insane IRR, generally not believable. Usually #s putforth in mgmt preesntations / CIMs 2) Upside - semi realistic but a stretch 3) Base - what i think is rasonable 4) Downside - kill the business in 2-3 of the 5 years you own and see what happens
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