PE Case Study 48h

General advice on how to deal with a case study (not CD&R specific):

• learn, but for real, about the company, thinking about how you can be AS GRANULAR AS POSSIBLE on topline / costs / cash flow items. Focus has to be on the obvious things, but also on “how does the growth capex impact my top line? What is the growth capex return?”. As someone already mentioned, you need to really back up your assumptions and think carefully. Should I add a tab for bolt on M&A?

• build a case that makes sense: check comps, brokers on comps (or your target if listed), earning calls etc. there should be a story (cost cutting? Turnaround? Growth? SoTP story?)

• once the model is in place, think about: 1 valuation, both at entry AND exit, and is the valuation making sense from a FCF yield perspective? What if I adj for the growth? Am I buying relatively cheap? Expensive? Why? 2. Cap stack: cost of capital / how sensitive is my valuation to that? LTV: is it making sense? Instruments: should I PIK part cause my fcf generation ain’t enough? Sweep? Should I syndicate the equity? 3. Think of a MIP, doesn’t need to be granular but has to make sense, ie, you cannot ask mgmt to put in 100m of coinvest 4. LBO returns and how they move if kd grows, (if Libor moves? Margin comes higher than expected?), what happens if you recap the business? 4. Can you unlock value through asset / division disposal? Maybe ground lease tx?

• do a SWOT analysis, well thought and well done

• do the pres, 7-9 pages + appendix with in this order: Exec Summary (which must incl. investment thesis, incl. high level risks, what you like and what is your recommendation your potential returns, as well as next steps), company overview, strengths-risks-mitigants-areas of further DD, industry overview, valuation, financials, LBO & returns, appendix which should incl. all the back up you need to reference

• think about how and what to present, often you have to condense 48h/72h of work into 20mins speech, often undervalued by candidates but really important. When they ask questions, if you don’t know something, don’t guess, just say “Will come back to you on this”