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The case describes the patrimonial situation of Marcela and Jorge Mansilla. The siblings descend from a family of landowners with fields in the province of Buenos Aires. They developed gastronomy and real estate activities and diversified risks. However, the bifurcation of destinations and businesses generated constant friction between the siblings. Frequent discussions made the situation very tense, and they are determined to do something to prevent money issues from affecting their relationship. The solution they intend to explore is to share the assets where each of them has the most control. For this, it is necessary to value the various businesses that the family holds.

emmtrix Technologies GmbH (emmtrix) was a spinoff company from the Karlsruhe Institute of Technology, a leading German university, and a result of an excellent-rated research project. At the end of January 2019, the emmtrix founders were preparing for a meeting with investment managers of a venture capital firm in Karlsruhe, Germany. After previous meetings with the investors in which the business concept and technology had been the focus, the main point of the upcoming meeting was to present the start-up's fundraising goals. The founders were expected to express how much money they wanted to raise and at which valuation of the company. To that end, the start-up team wanted to prepare information on the company's financial forecasts for the next five years, the fundraising amount to be raised in the initial financing round, and first ideas on the value of the company.

emmtrix Technologies GmbH (emmtrix) was a spinoff company from the Karlsruhe Institute of Technology, a leading German university, and a result of an excellent-rated research project. At the end of January 2019, the emmtrix founders were preparing for a meeting with investment managers of a venture capital firm in Karlsruhe, Germany. After previous meetings with the investors in which the business concept and technology had been the focus, the main point of the upcoming meeting was to present the start-up’s fundraising goals. The founders were expected to express how much money they wanted to raise and at which valuation of the company. To that end, the start-up team wanted to prepare information on the company’s financial forecasts for the next five years, the fundraising amount to be raised in the initial financing round, and first ideas on the value of the company.

In February 2021, the owner of Anwal Gas Traders, a liquefied petroleum gas distribution company based in Sakesar, Khushab District, in the province of Punjab, Pakistan, was considering whether to invest in expansion. It would be the first significant expansion for the company since its founding in 1998. Based on data provided by a consultancy firm performing capital budgeting techniques, the company would integrate backward to take advantage of perceived market potential. The owner needed to determine whether this investment was worth making and how various scenarios would affect his decision.

WeWork, a fast-growing but unprofitable real estate firm headquartered in New York, which leased shared office space around the world, announced in September 2019 that it was cancelling its plans for an initial public offering (IPO). In late 2020, as the company weathered the effects of the COVID-19 pandemic, several special purpose acquisition companies (SPACs) approached WeWork, offering an increasingly popular alternative method for the company’s shares to become publicly traded. In January 2021, WeWork’s new chief executive officer (CEO) was considering an offer from BowX Acquisition Corp., a “blank check” corporation. The CEO and the WeWork board needed to understand the benefits and disadvantages of a SPAC merger.

In 2016, US firm Aerojet Rocketdyne Holdings, Inc. (Aerojet) had been developing and manufacturing propulsion systems for rockets and armaments for long-range weapons systems for over 70 years. It also owned 4,634 hectares of land and an investment portfolio worth more than its stock’s market capitalization—but it had a large amount of debt and an underfunded pension plan. Aerojet’s stock had fallen over 30 per cent to US$16.30 under new executive leadership, and a hedge fund manager at Royal Capital Management LLC had to decide whether to wait for Aerojet to take off. After valuing the firm’s various assets, he concluded the stock was worth $35 based on the sum of the parts, but he needed to consider some of the parts, including its significant debt and a pension plan underfunded by $637 million, which were still cause for concern.

This short note introduces all of the important and commonly used financial ratios, organized into five categories: (1) liquidity ratios, which measure a company's ability to meet short-term debt obligations; (2) leverage ratios, which evaluate a company's capital structure by measuring how a firm uses debt and equity to finance its operations; (3) efficiency ratios, which measure how efficiently a company is utilizing its assets and resources; (4) profitability ratios, which measure a company's ability to generate profit from its resources; and (5) market ratios (also called valuation ratios), which evaluate the share price of a company's stock.

In late November 2017, Roark Capital Group (Roark) must decide on a last, best offer to purchase Buffalo Wild Wings (BWW) in a leveraged buyout (LBO) for $157 per share. That bid had followed a series of offers that began in August 2017, at $150 per share, after a protracted proxy fight by activist investor Marcato Capital (Marcato) ended with the resignation of BWW's longtime CEO, Sally Smith. Marcato had accumulated a sizeable stake in BWW and several board seats as part of the proxy contest and had been pushing BWW's board to seek a higher price. Roark must now decide if the returns to its investors merit the $157 per share offer. This case is meant to follow cases in which the topic of residual cash flows and LBOs have been introduced. We typically assign it after teaching an earlier case that introduces that material and how private equity (PE) sponsors typically evaluate LBOs, such as "DuPont Corporation: Sale of Performance Coatings" (UVA-F-1709) (DPC). DPC provides an opportunity to evaluate an LBO from a company's and sponsor's perspective, but the cash flows and debt structure are simplified to focus on the conceptual differences in how the parties might view the deal. BWW focuses on the sponsor's (Roark's) perspective and includes a richer set of operating synergies and a more complex debt structure. The debt structure features existing debt that must be refinanced and multiple tranches of debt. As such, the case introduces students to several types of debt that are commonly used to finance LBOs and their related terms. It also introduces students to the pros and cons of LBOs of franchise-model businesses, an area of strong PE investor interest. We also typically assign a technical note, "Valuing Late-Stage Companies and Leveraged Buyouts" (UVA-F-1846), to be read in conjunction with cases that cover LBOs. The note provides a basic overview of the primary sources of financing and the metrics used to gauge LBO capital structures and a step-by-step example

Spreadsheet Supplement for Case UV8340

Spreadsheet supplement for case W25080.

In 2016, US firm Aerojet Rocketdyne Holdings, Inc. (Aerojet) had been developing and manufacturing propulsion systems for rockets and armaments for long-range weapons systems for over 70 years. It also owned 4,634 hectares of land and an investment portfolio worth more than its stock's market capitalization-but it had a large amount of debt and an underfunded pension plan. Aerojet's stock had fallen over 30 per cent to US$16.30 under new executive leadership, and a hedge fund manager at Royal Capital Management LLC had to decide whether to wait for Aerojet to take off. After valuing the firm's various assets, he concluded the stock was worth $35 based on the sum of the parts, but he needed to consider some of the parts, including its significant debt and a pension plan underfunded by $637 million, which were still cause for concern.

In February 2021, the owner of Anwal Gas Traders, a liquefied petroleum gas distribution company based in Sakesar, Khushab District, in the province of Punjab, Pakistan, was considering whether to invest in expansion. It would be the first significant expansion for the company since its founding in 1998. Based on data provided by a consultancy firm performing capital budgeting techniques, the company would integrate backward to take advantage of perceived market potential. The owner needed to determine whether this investment was worth making and how various scenarios would affect his decision.

Student spreadsheet to case W24752

WeWork, a fast-growing but unprofitable real estate firm headquartered in New York, which leased shared office space around the world, announced in September 2019 that it was cancelling its plans for an initial public offering (IPO). In late 2020, as the company weathered the effects of the COVID-19 pandemic, several special purpose acquisition companies (SPACs) approached WeWork, offering an increasingly popular alternative method for the company's shares to become publicly traded. In January 2021, WeWork's new chief executive officer (CEO) was considering an offer from BowX Acquisition Corp., a "blank check" corporation. The CEO and the WeWork board needed to understand the benefits and disadvantages of a SPAC merger.

This case explores the dynamic allocation approach to investing, an approach that would time the market based on factors' relative valuations. Research Affiliates created a RAFI Dynamic Multifactor US index that dynamically allocated five factor strategies: value, quality, momentum, size, and low volatility. In this course, students will utilize various information presented in the case to discuss why Research Affiliates decided to launch the strategy, how Research Affiliates times it, and what has been its performance relative to the Russell 1000 Index and other competitors. Students will also assess the strategy's performance and some of the limitations of its dynamic strategy.

La Madrilena, footwear and sport goods' retailer, operated 18 stores -under La Madrilena brand for shoes and Quonam for sports- in Argentina's Patagonia region. This case describes the company's situation in May 2014, when Argentina experienced significant macroeconomic uncertainty as a result of strong local currency devaluations and greater foreign exchange availability restraints enforced in December 2013. Domestic prices rose at a rapid pace, and an economic downturn loomed ahead. Against that backdrop, La Madrilena's management team pondered a decision to start or delay remodeling work on a real estate property in Esquel, a city in Patagonia, that required an investment of ARS 5 million (equivalent to USD 625,000 at the time). After describing La Madrilena's background and operations, the case focuses on the design of financial performance management reports and provides extensive information on the company's economic and financial performance over the past five years.

In June of 2021, KKR's executive team convened to prepare for an upcoming board meeting. From a small, three-person partnership that started in 1976 and invested only in U.S. LBOs, the firm 45 years later was a public company that employed over 1,600 people and managed $252 billion across 21 offices around the world. As a public company, KKR needed to maintain growth to be competitive, and the executives wanted to envision what KKR would look like in 2025. A target earnings number for that year would give a tangible goal to its employees and Wall Street. What should it be? The executives also wanted to provide the Board of Directors a sense of what drove each of KKR's profit streams. Which profit streams were most attractive and why? As a result, what should be the company's strategic priorities?

Luckin Coffee Inc. (Luckin), an emerging growth firm that aimed to become the market leader in the coffee industry in China, had quickly grabbed market share by using freebies and discounts to entice cost-conscious Chinese consumers to try its products. Luckin sold its coffee and snacks through a proprietary mobile app, and customers either picked up their orders from strategically located stores or had them delivered. By the end of 2019, Luckin had served 40 million customers from its 4,500 stores. While the path to Luckin’s goal was clear, investigations revealed that key executives and board members had allegedly defrauded investors by distorting revenue and expense figures and engaging in related-party transactions that channeled resources out of the company. The accounting scandal led to further investigations, penalties from Chinese regulators, and a drop in the company’s share price and valuation, which went from $12 billion to below $1 billion within 11 months of listing. By August 2020, the company had been delisted from the Nasdaq exchange, its board composition had been changed, and it had been placed under the supervision of “light touch” provisional liquidators in the Cayman Islands. Was there a chance that Luckin could survive the scandal and its investors could recoup their funds? What could the company do to restore investor confidence and regain its path to becoming the market leader in the Chinese coffee industry? What were the implications of the accounting scandal to current and future listings on US stock exchanges?

The Apax Digital team faced important decisions as they contemplated raising a second fund. Apax Digital Fund I was a $1.1 billion vehicle focused on mid-market growth equity and growth buyouts in the technology sector. The fund had performed well, and the Managing Partners Marcelo Gigliani and Dan O'Keefe felt that demand from investors would be strong for ADF II. However, raising a bigger fund would come with several strategic implications for the team's size, investment strategy, and sourcing model. What should be ADF II's hard cap, and how should they handle the implications of a larger fund?

In July of 2021, Bessemer Venture Partners (BVP) contemplated the future of its growth investing practice, known as "Century." While still relatively new as a focused initiative, BVP's growth investing already had significant momentum. The fund's investment pace had been faster than expected, and the initial investments looked strong. But many of their VC competitors had already been operating growth funds, a new wave of growth-stage-focused investors were increasing their investment activity, and the team wondered what BVP should do. They considered three "out of the box" ideas: extending the firm's multi-stage focus to include leveraged buyouts, expanding aggressively into East Asia and Africa, and applying the BVP process to public companies through a hedge fund. Which option, if any, should the team pursue?