Take Private LBO model Case study

In October 2015, the private equity fund you work for is in discussion with Big Storage Plc, a listed self storage company in the UK, around a potential take private transaction.  The company has supplied you with some high level information about their business (see model on next tab and additional information below) as well as a partially completed model that you are free to modify or adjust as needed. Please make your own assumptions if the information is not available or incomplete.

Requirements – you have 3 hours

Please provide an assessment of the business and financial information to the partners; the transaction is time sensitive so you will be required to present the following in 3 hours to the committee:

-          A brief 1 page investment memorandum (20 bullet points maximum) that includes your views on:

o   The market

o   The business model of this business

o   Whether we should bid for the business or not, and if so, what price to pay

o   Simple financial forecasts, source and uses, valuation metrics (i.e. multiples), as well as returns and sensitivities

Please do not use the internet or other sources of information other than what is provided. The company is for illustration purposes only and this does not represent an actual transaction.

Key deal assumptions:

-          Assume similar entry and exit multiples

-          Following discussions with investment banks, you understand that the minimum premium required to take the company private is 20%

-          Financing package would be 4.0x senior debt (amortising £20m per annum) at LIBOR + 3.0%, as well as 1.0x of mezzanine with a 5% cash pay and 5% rolled up interest

-          Deal fees of 2%

-          Tax at 25%

-          For simplicity, assume you are buying 100% of the business (i.e. no management rollover / stake), and that the transaction closes at year end on 31 December 2015

-          5 years exit

OTHER ASSUMPTIONS AND MODEL REQUIRED TO COMPLETE THE CASE STUDY ARE IN THE EXCEL FILE AVAILABLE FOR PURCHASE

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Take Private LBO model Case study

Take Private LBO model Case study