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This note discusses the capital structure often found in LBO transactions. Although the specifics of each capital structure vary case by case, in any given year, there is a great deal of similarity in the capital structure of these buyouts. These similarities exist because debt structure is largely determined by the deal size and market conditions. The note summarizes historic trends and practices related to the debt structure in the buyout space.

This case concerns the negotiations of a deal by HgCapital, a UK-based private equity firm, to buy Visma, ASA, a Norwegian software company. Visma has received an offer from Sage Group, a strategic acquirer. HgCapital must determine if it wants to bid and how to outbid a potential strategic acquirer. The case concerns bidding and negotiations strategies as well as deal structuring issues. In particular, the cross border nature of the investment, a UK firm investing in Norway, leads to a number of financing issues related to raising the debt for the LBO. The case provides an opportunity to role play both the PE fund perspective and the potential target.