Pitch me an LBO candidate - idea generation
Wondering what sources of inspiration people use to find companies to pitch in a PE interview - especially for MM shops
Do the companies you pitch have to be private, and not already invested in by another PE firm? What's the best way of finding potential sources if you don't have access to Capital IQ etc.
.
Bump
To answer this question, I would look at it more as a question of do you know the fundamentals of an LBO. For what to look for in an LBO candidate, you want to select a target that has the following factors that are also important in an LBO:
For Private, vs Public targets, It really depends on the situation that you are in. Are you going to potentially be asked to pull additional information, Maybe go Public. For public targets, I would look for companies that are in fragmented spaces, that have has 5 years of good operating history but some slowdown in margin expansion or growth.
If this is all more theoretical you, can talk through the industries that might have good cashflow profile. Something along the lines of "I would expect [Subsector] to have prime targets for a LBO strategy, due to the nature of strong margins and recent market tailwinds. Given the fragmentation of the market, this would also give the opportunity to do several add-ons to accelerate growth. Given any one individual target, diligence would need to be preformed to understand the risks of the business and make sure the debt is serviceable"
Hope this helps.
Amet laudantium error porro cumque veritatis nisi. Nam maiores quas et illo. Aut molestiae est illum qui qui.
Quo quam dolor voluptatem iusto dolores sed explicabo. Quia recusandae consequatur et aut vitae. Deserunt cumque molestiae iure non. Omnis occaecati optio reiciendis autem magni dolore harum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...