Starting Issue

- A leading US investment fund envisaged to make an offer for a €4 billion LBO and required a deeper analysis of the auction process to define its optimum bid price and walk away price. 

Methodology

- Valuation model to assess the value of the target with a variable level of debt
- Definition of key valuation criteria and risk factors
- Analysis of the competitive landscape and auction techniques from competitors 

Advice and results

- Determination of pricing for the sealed bid auction
- Walk away from a second round of auction which would not have met the fund investment criteria in terms of return on investment
- The client team refocused and invested on another successful and less risky investment