Class 4 - Royal Palm Hypothetical

Class 4 - Royal Palm Hypothetical - Class 4: Royal Palm...

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[[NYCORP:2565908v16:4535B:09/16/09--09:23 a]] Class 4: Royal Palm Developments Upon hearing the news of the bidding war between Trump and Chapter House for Royal Palm in the Ithaca Journal, Bud Bootstrap, a managing director of Leveraged Buyouts L.P. (“LBO”), decides to investigate. Bud figures that Royal Palm might be a good candidate for its portfolio of historical bars it owns around the country. By improving the marketing and image of the bar, as well as implementing cost-cutting measures LBO has perfected at its other portfolio companies, Bud concludes that LBO should be able to make out well on this deal. Bud signs a confidentiality agreement with Frank and receives financial information to determine whether it wants to make a proposal. After running the numbers, LBO decides to make an offer. LBO would rather offer less for the business, but knows that the Royal Palm building itself is worth a substantial amount in today’s market. To get to a price that he believes will be competitive, and to preserve as much as
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