BF3207/3219 Alternative Investments Individual Assignment Brief

BF3207/3219 Course Project: LBO Target

In this project, you will be tasked with finding a suitable listed LBO target for a PE Fund.  

1. The criteria for the target is given on page 2
2. This is an individual project., the final deliverable is a brief (written report in pdf format)
3. The format for the brief is given below.
4. The brief should contain sufficient details including facts, numbers, charts, etc. to support your conclusions and recommendations.
5. The analysis in the memorandum needs to cover at least three cases: Base case, Upside case, and Downside case. Discussions on Open cases are optional.
6. Length of the brief is restricted to 4-8 pages (excluding cover page, table of contents and appendix).
7. Report Format:

   A. Investment Thesis / Executive Summary
   B. Company Overview – Profile, industry, products, and competitive positioning.
   C. Financial Summary / Key Metrics, and Forward Projections / Assumptions
   D. LBO Suitability – Explain why the company is suitable: stable existing or projected cash flows, growth opportunities, operational improvement potential.
   E. Setup checkboxes – Growth, Turnaround, Multiple Abr etc
   F. Value Creation Opportunities – Identify ways a PE sponsor could enhance performance: cost reduction, operational efficiencies, market expansion, acquisitions.
   G. Debt & Returns Analysis – Justification of assumed debt, cost of debt, and IRR.
   H. Risks / Limitations – Identify major risks and assumptions.
   I. Scalability – Discuss how the company could expand across: markets, distribution, operations, regulatory considerations. What is the plan?
   J. Exit Considerations – Potential exit strategies: IPO, trade sale, secondary buyout.
   K. Sector overview – Overview of the sector, catalysts, developments, risks, growth etc L. Comparables: Snapshot of the 3y performance of key players

Deadline of submission:

11:59pm, 13th November (Thursday), 2025. (Soft-copy with a single pdf file submitted via NTULearn. Submission of the Excel model is not required.)

Plagiarism is strictly prohibited.

Objective: 

Search for a suitable LBO target for a Private Equity Fund.

Fund Criteria: 

Exchange:         Global but no frontier markets

Deal size:          USD50m – 10b

Target Criteria: 

1. You have free reign to choose a LBO target according to the setups – Growth, Distressed / Turnaround, Multiple Arb, Asset Play, Strategic M&A, Roll up (you’d need to find a few) 
2. Your pick(s) must check setup checkboxes
3. Minimum defensible annualized IRR 25% for 3-5 years, higher defensibe IRRs will get higher marks

ASSUMPTIONS:  

1. Buyer:

   Assume acquisition by a tier-1 PE fund using standard PE methods to scale the business. For Strategic M&A, find a realistic strategic buyer that can support your plans.

2. Forward Assumptions:
   
   Base projections on analyst consensus estimates, company guidance, or public filings. If unavailable, generate rational projections based on historical performance and industry trends. Adjust forecasts to reflect PE-driven value creation, e.g., operational improvements, cost optimization, market expansion, or strategic initiatives.

3. Debt Assumptions:

   Research realistic and likely debt levels and interest rates a tier-1 PE fund would deploy. Justify assumptions on total leverage, cost of debt, and capacity to service interest relative to target cash flows.

4. Exit Assumptions:
   
   Listing – justify your exit multiples and choice of exchange

   Trade sale  – justify your exit multiples 

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