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Upper Mid-Market Private Equity Fund
An independent practice case, not supplied or endorsed by the named firm.
Build a packaging LBO and propose a first-round bid that meets a 20% IRR target.
Build a packaging LBO and propose a first-round bid that meets a 20% IRR target. You have 90 minutes and a blank spreadsheet. The model includes plant-closure savings, capped tax losses, floating-rate debt, management reinvestment and options.
Sedgecroft's owner, a private equity firm that has held the business since 2020, has hired advisers to sell it in a two-round auction. Their guidance is 7.5x to 8.5x LTM EBITDA of £72m for the enterprise value (the buyer takes the business with no debt and no cash), and the Seller has set a reserve price: it will not sell for less than 7.5x.
Round one asks for non-binding offers; shortlisted bidders get full access for due diligence in round two. The deal team has a financing package from its lenders, management's five-year plan and a view on exit multiples. The fund's investment committee requires a gross IRR of at least 20% over a five-year hold. The partner wants your recommendation for the first-round letter: an enterprise value and multiple of LTM EBITDA, or a decision not to bid.
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