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Mid-Market Private Equity Fund
An independent practice case, not supplied or endorsed by the named firm.
Model a marine-electronics take-private with convertible preferred equity and a debt-funded software acquisition.
Model a marine-electronics take-private with convertible preferred equity and a debt-funded software acquisition. You have three hours and a template. Compare conversion with redemption at each exit date and calculate the effect of offer premiums and exit multiples.
Gwenver's board has recommended a cash offer at a 30% premium to the undisturbed share price of £1.60, and the deal completes on 31 December 2025. The consortium will buy out every ordinary shareholder and settle the existing share options and warrants, refinance Gwenver's debt, and fund the deal with a senior term loan, fixed-rate notes and equity. The fund's cheque is fixed in pounds; the co-investor's ordinary equity fills whatever is left of the uses. Management will receive new share options with a fixed strike equal to the base-case offer price.
Two years after completion, the plan is to buy a vessel-performance and emissions-reporting software business, paying for it from that year's cash flow and a draw on Gwenver's revolving facility. The investment committee wants to know what the fund makes on its preferred if the consortium exits at the end of any year from 2026 to 2030, whether and when the fund should convert, and how the 2030 return moves with the exit multiple and with the premium paid.
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