Cons motivation of the management if they have

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Company is already aware about LBO constraints (debts, reporting, etc.) Cons: - Motivation of the management if they have already been successful during the 1st LBO - The heavy weight of debts may handicap the company - Is there a real strategic value for the company? DIFFERENT WAYS OF EXIT (1/3)
p. 34 THE LBO PROCESS The IPO: Pros: + Generally a good valuation (sometimes very high) + Quite short timing + More limited due-diligence + Management motivation Cons: - Partial exit (40-50% of shares maximum) - Low liquidity and volatility of the shares prices - Selective criteria (growth, size, sector, etc.) Bankruptcy DIFFERENT WAYS OF EXIT (2/3)
p. 35 THE LBO PROCESS DIFFERENT WAYS OF EXIT (3/3) Source: Pitchbook as of January 2018 Global : Deal Volume (2006 - 2017) Global : Deal Value (2006 - 2017) 46% 48% 58% 57% 52% 54% 54% 50% 50% 51% 49% 45% 15% 13% 7% 11% 13% 8% 7% 10% 11% 8% 7% 9% 39% 39% 35% 32% 34% 38% 39% 39% 39% 42% 44% 45% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Strategic Buyer Financial Buyer IPO 48% 40% 57% 60% 52% 57% 56% 61% 55% 58% 64% 59% 18% 16% 7% 22% 18% 14% 9% 14% 17% 10% 8% 9% 33% 44% 36% 18% 29% 29% 35% 25% 28% 31% 27% 32% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Strategic Buyer Financial Buyer IPO
p. 36 THE LBO PROCESS An advantage for the company: Change in a way of managing the company (cash-flows, return on investments focus…) Equity stake for the management => motivated managers Stimulates the growth and development: acquisitions, open new sites, new subsidiaries… Company structure modified (reporting tools, committees, boards…) Possibility to benefit from (external) advices at all times Easier process for “hard” decisions (activity ceased, reorganization…) Increase the company’s network … but should just be a step: The weight of debts and its constraints increase the possibility of bankruptcy… … Or may slow down the growth of the company in the long-run The necessity for the shareholder to sell may create a tensed atmosphere … … or postpone decisions which are not compatible with returns (IRR) PROS & CONS OF LBOS
p. 37 TABLE OF CONTENTS GENERAL OVERVIEW ACQUISITION TYPES LEVERAGE EFFECT EQUITY INVESTOR INVESTMENT RATIONAL SUCCESS & VALUE CREATION THE LBO PROCESS DEAL SOURCING, DD PROCESS FINANCING STRUCTURING, CLOSING POST CLOSING & EXIT FINANCIAL APPROACH TO LBO KEY NOTIONS FINANCIAL PERFORMANCE & REPORTING ANALYSIS BUILDING THE BUSINESS PLAN PRICING METHODS TRANSACTION EXECUTION EVOLUTION OF THE LBO FINANCING PURCHASE PRICE & FINANCING TOOLS LEGAL APPROACH TO LBO SPA, REPS & WARRANTIES, SHAREHOLDERS AGREEMENT APPENDIX
p. 38 FINANCIAL APPROACH TO THE LBO The 5 key financial notions of an LBO are: EBITDA: Earnings Before Interest, Tax, Depreciation & Amortization EBIT: Earnings Before Interest & Tax Free-Cash Flow: cash-flow available after financing capex and working capital Enterprise Value: the total of the equity value and net debt IRR: Internal Rate of Return The 5 basic questions: What is the EBITDA forecasted over the next 5 years?

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