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Mid-Market Private Equity Fund
An independent practice case, not supplied or endorsed by the named firm.
Build a price-and-volume forecast for an online textiles retailer, then model the LBO, preferred return and management sweet equity.
Build a price-and-volume forecast for an online textiles retailer, then model the LBO, preferred return and management sweet equity. You have two hours and a blank spreadsheet. Forecast Italy and Spain separately, accrue PIK interest and reconcile the sponsor's gain to a value creation bridge.
You are an associate at a PE fund. The deal team is weighing up a five-year investment in Brightholm Textiles and wants your analysis. The acquisition completes at the end of Year 0, the financial year to 31 December 2025; Years 1 to 5 are 2026 to 2030. There is no information pack and no model template: everything you need is on this page.
Brightholm trades only online, selling direct to consumers in two markets. In Year 0, Italy generated 75% of its sales value and Spain 25%. That year the market for Brightholm's product range was worth €3.6bn in Italy and €2.4bn in Spain, Brightholm held 11.0% of the two markets taken together, and it sold 9.0 million units in Italy against 2.75 million in Spain.
Italy. Brightholm's Italian share has been slipping. To win back volume, management will cut the average selling price by 8% in Year 1 and keep it at the new level from then on. They expect the lower price to lift Italian unit sales by 5.0% a year, in every year of the plan.
Spain. Spanish market value is expected to rise by 3.0% a year. Brightholm aims to add 1 percentage point to its Spanish share each year from Year 1, and to put its prices up by 2.0% a year.
The operating and transaction assumptions for Questions 2 to 4 are set out under Transaction assumptions below.
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