Evaluating an Investment Opportunity
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Situation. Executives at a distressed company approached a private equity firm to finance the buyout of the business from its existing creditors. C3 was engaged by the private equity firm to evaluate the deal.
Actions. Established and maintained relationship with company CEO. Assessed the operating efficiency and management capabilities of the enterprise. Evaluated the market demand and offshore competitors in light of company’s proposed existing business model. Integrated analyses and evaluated likely cash flows and component valuations.
Recommendations. Advised client that turnaround strategy was not strategically or financially viable. Restructuring/component value also less than debt claims.
Results. Client declined investment. Company eventually was liquidated in Chapter 7.
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