Private Equity Case Study (Retail Company), $189.87

This is a 6 page case study, similar to what you woudl get in the investment case/modelling test interview session at a private equity firm. The file contains: (i) a 6 page case study (ii) a worked out word document answer (iii) a full LBO model (iv) guidance notes on how to best answer case studies. Note this is NOT COMPATIBLE WITH MAC/APPLE PRODUCTS.

Extract of the case study below.

Background

Dechaux Retail (“Dechaux” or the “Company”) is a leading regional grocery retailer in Germany and France. Originally founded in 1952 by Nicolas Dechaux, the Company is still fully-owned and operated by the Dechaux family; Thomas Dechaux, Nicolas’ grandson, is CEO of the Company and various family members hold managerial positions within the group. From its founding, Dechaux has been carefully expanding through organic growth and selective acquisitions. However, over the past five years, the Company has gone through a strong wave of growth, increasing its store count by more than 20%.The Dechaux family has recently expanded outside retail and now owns various businesses in the luxury goods and telecommunication industry. It is now considering disposing of its grocery retail activities to further expand in those new sectors.

Operations

Today the Company operates a network of 400 stores, all of which are fully-owned. The stores range in size from 2,787 m2 to 7,897m2 (averaging 3,675 m2). All of the Company’s stores carry products from primary grocery categories such as fresh vegetables and fruits,

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Instructions

Create a brief Investment Recommendation (no more than 5 slides in addition to any tables or charts) that addresses:
a) How much are you willing to pay for this company?
b) What is the resulting IRR and multiple of capital that we would expect to realize as an equity investor?
c) What are the key drivers for this valuation, and what assumptions have you made?
d) Identify the investment merits and investment risks (along with potential mitigating factors to the investment risks)
e) What are the key questions you would seek to answer during due diligence (ranked in order of priority)?