Dastidar A BD 6050 2.docx - BAIN CAPITAL DOLLARAMA...

BAIN CAPITAL &
DOLLARAMA
Assignment 01 – SGMT- 6050
Arunabha Ghosh Dastidar | 215705239
[email protected]
Declaration
I Arunabha Ghosh Dastidar hereby certify that the attached
assignment & all materials therein have been created by me unless
otherwise footnoted & that all the material contained herein including
charts, graphs & other materials have been created by me.

Case Outline
Larry Rossy’s Dollarama is considered as one of the most coveted & successful stores in
Canadian value retail Industry. With over 349 stores across Canada (75% of which are in
Quebec & Ontario), Dollarama’s size & spread, despite its geographical concentration,
has been able to outrun its competitors & create a substantial real-estate in the
consumers’ mindset. Economies of scale, Rapid expansion with mostly owned stores &
the maintained double-digit EBITDA from last few years, makes it an appealing candidate
for leverage Buyout (LBO) have attracted lots of Private equity funds in Dollarama like
Blackstone, Onex & the Ontario Teachers’ Pension Plan, to name a few. Boston based
Bain Capital is one of the major bidder, speculating to accomplish the buyout deal for
Dollarama from Larry Rossy, who is in his late 60s but intend to work with the company
post-transaction too. With an experience in major successful leverage buyouts like Sleep
Country Canada in past, Bain’s investment approach was centered on driving bottom line
growth through making operational recommendations & changes to its portfolio
companies after careful analysis of market growth potential, industry attractiveness,
competitive position & financial performance. The deal attracts a leverage of about $600
million from major Canadian banks & has a number of improvements & risks to be
considered in order to justify & materialize returns on this gigantic value of transaction.
Situational Analysis – Key Prospects & Stakeholders’ perspectives
Analyzing the situation from Larry Rossy’s perspective, I would be anxious about the
following key prospects for Dollarama, in which I invested more than a decade in
strategizing, expanding & creating a known a known brand in Canadian household:
1. Expansion & Market Growth Post Transaction – Even though I am going
ahead selling out the majority stake in Dollarama, but I would still like to see it
expand & grow in market share. This instigates me to analyze the capability of the
bidders to keep the business expanding & afloat even after the nuances of the LBO
have taken place. As presented in the appendix section 2.2 , Bain capital has a
strong hold in business consulting & operations. Its business consulting techniques
for portfolio businesses have predominantly yielded superior returns than other PE
funds interested in this bid.
2. Valuation, Bid & Clarity of Financial Package – Canadian Value retail industry
is far less saturated & has a good scope of expansion & growth for company like
Dollarama in the sector which boasts decent margins. So, to safe guard the best
interests of the stakeholders, getting the right valuation & bid for the company is
essential for my consideration. This not only substantiates the legacy of Dollarama