Private equity firm Clayton, Dubilier & Rice (CD&R) is preparing a bid for leading US car rental agency Hertz. By replacing Hertz's top managers, improving capital management and driving down operating costs, CD&R sees an opportunity to nearly double EBITDA. However, the turnaround involves significant risks, which CD&R must weigh in preparing its bidding stategy. Students are required to assess and value the business, evaluate a post-acquisition operating turnaround plan requiring new leadership, select a financial structure to mitigate significant cyclicality, and craft a winning bidding strategy in the context of a competitive auction. Please visit the dedicated case website "https://cases.insead.edu/turnaround-of-hertz/" to access supplementary material.
In 2011, Ingersoll-Rand (IR) decided to divest its refrigeration equipment subsidiary, Hussmann International. However, the routine auction process for the non-core asset went awry when both Hussmann's performance and external finance markets weakened significantly during the due diligence period. IR's agent, JP Morgan, sought interest from potential buyers and focused on a few leading buy-out firms that submitted bids. After not seeing eye-to-eye with the initial auction winner, Ingersoll-Rand engaged exclusively with a lower bidder, the private equity firm Clayton, Dubilier & Rice. The challenge for CD&R is to develop a deal structure that can meet both parties' needs, offering enough value to Ingersoll-Rand to keep them from walking away, yet taking into account the increased riskiness of Hussmann's recent performance to justify CD&R's valuation. The student takes the perspective of CD&R. Please visit the dedicated case website http://cases.insead.edu/hussmann to access supplementary material.
Mekong Capital, a private equity firm based in Vietnam, is considering exiting its stake in restaurant chain operator Golden Gate. Despite robust growth, Golden Gate's profitability is lagging. Students are asked to evaluate the best means of exit and whether operational improvements are required to attract buyers or create the foundation for a successful IPO. Please visit the dedicated case website http://cases.insead.edu/mekong-capital to access supplementary material.
John Clough, the CFO of NetRF, a tech firm in Salt Lake City, gets an offer he's not sure he wants to refuse. Benchmark, a Fortune 500 packaged goods company, is looking for someone to join its audit committee. "Would you be interested?" the executive recruiter asks. John's experience with publicly held companies is limited, but he's highly regarded in the financial community for his acumen and probity. At NetRF, a maker of wireless communications equipment, John had championed expensing stock options when it was uncommon for high-tech firms to do so; he'd received a lot of admiring press for that move. In mulling over the offer, the 39-year-old executive and flight enthusiast considers his situation. He loves his work, his Cessna time-share, and the skiing in the Salt Lake area. Board membership would confer a certain amount of prestige, but would he be spreading himself too thin? One colleague extols the virtues of board membership--the opportunity to learn and expand your business network. But the chief outside counsel to NetRF warns that the hours can be considerable and board members' responsibilities (post-Sarbanes-Oxley) substantial. Subsequent meetings with Benchmark's nominating committee, its CEO, and its audit committee leave John with more questions than answers. Should he join the board? This fictional case study outlines the risks and rewards of board service. Commenting on this fictional case study in reprints R0502B and R0502Z are Peter Goodson, a strategic adviser to corporate boards; John F. Olson, chair of the ABA Business Law Section's Corporate Governance Committee; David J. Berger, a partner at the law firm Wilson Sonsini Goodrich & Rosati; and Charles H. King, managing director at Korn/Ferry International.
John Clough, the CFO of NetRF, a tech firm in Salt Lake City, gets an offer he's not sure he wants to refuse. Benchmark, a Fortune 500 packaged goods company, is looking for someone to join its audit committee. "Would you be interested?" the executive recruiter asks. John's experience with publicly held companies is limited, but he's highly regarded in the financial community for his acumen and probity. At NetRF, a maker of wireless communications equipment, John had championed expensing stock options when it was uncommon for high-tech firms to do so; he'd received a lot of admiring press for that move. In mulling over the offer, the 39-year-old executive and flight enthusiast considers his situation. He loves his work, his Cessna time-share, and the skiing in the Salt Lake area. Board membership would confer a certain amount of prestige, but would he be spreading himself too thin? One colleague extols the virtues of board membership--the opportunity to learn and expand your business network. But the chief outside counsel to NetRF warns that the hours can be considerable and board members' responsibilities (post-Sarbanes-Oxley) substantial. Subsequent meetings with Benchmark's nominating committee, its CEO, and its audit committee leave John with more questions than answers. Should he join the board? This fictional case study outlines the risks and rewards of board service. Commenting on this fictional case study in reprints R0502B and R0502Z are Peter Goodson, a strategic adviser to corporate boards; John F. Olson, chair of the ABA Business Law Section's Corporate Governance Committee; David J. Berger, a partner at the law firm Wilson Sonsini Goodrich & Rosati; and Charles H. King, managing director at Korn/Ferry International.