This website uses cookies to ensure you have the best experience. Learn more

Tad O’malley: The Investment Conundrum Essay

3060 words - 13 pages

Tad O’Malley: The Investment Conundrum

By David Birulin

The Empire Investment Group was a top-tier buy-out firm within the private equity community. Tad O’Malley, a second-year student at the Harvard Business School, accepted a position at Empire Investment Group.
Ted received a call from his boss, Townsend “Sandy” Beech, the head of his four-person deal team and founding member of the firm. Sandy requested Tad, on a Friday afternoon, to review three presentations for possible buyout targets. Tad was to make a presentation at the partners’ meeting on Monday morning, recommending only one (1) investment and detailing the strengths and weaknesses of all three.
The Empire ...view middle of the document...

Companies all over the world, of all sizes and industries, can be targets of leveraged buyout transactions. Strategically, Empire was seeking companies to buy-out in England, the new India office, and Germany.
Empire was facing a tremendous workload and recently had lost a highly publicized deal. Recent trends in the market had seen volume and size of Leverage Buy-out deals rise dramatically. Opportunities were opening up all over the world, and Empire wanted to be sure it maintained its high profile not only in its U.S. stronghold but also in Europe, India, and Asia.
The U.S. Leverage Buy-Out Industry invested in 752 transactions for $136.5 billion in 2004. The average transaction was $181.5 million. In the 1990’s, companies had become more efficient both in terms of finance and operations as compared to the 1980’s where companies were under-productive, underleveraged and needing efficiency increasing measures. According to the Case Study, “Corporate America is generally more efficient than in the 1980’s. There are not as many institutions where you can just cut expenses and capital expenditures and… realize a great return on investment. You have to be prepared to add value in some way.”
The industry’s purchase price in 2004 was on average 7 times EBITDA (earnings before interest, taxes, depreciation and amortization), the highest level since 1999. The average debt multiple was 4.4 to 6.6 of EBITDA.
According to the case study, “another feature of the U.S. private equity market was its increasing internationalization. In 2005, fund-raising outside the U.S. was expected to exceed $70 million.” Also, U.S. firms had established international offices from which to deploy money. “Major U.S. LBO operations like “Carlyle, Blackstone, TPG, KKR, and Bain Capital – all had several overseas offices by 2005.” Empire felt the pressure to compete; “by 2005, the question was not whether a large private equity firm had an international operation but what international deals it was doing.
As an industry, marketing was word-of-mouth and targeted. Empire has an excellent team proactively researching companies from public records who they believe meet their financial objectives. The sales cycle can be long, but the returns are typically high. The basic approach is to build relationships with government agencies, company leadership, and build a business case to help companies achieve their financial goals.
Empire’s product is their knowledge and ability to restructure companies, fund improvements or reduce expenses to increase EBITDA with very little of their own cash. Empire may be a major investor or purchase the company outright, but their objective is to find a company whereby they can achieve an ownership position with very little cash and over a 3 to 5 year period, sell out generating very high internal rate of returns.
The three companies Tad is reviewing are Coming Home Funeral Services, 3F AG, and Gurgaon Manufacturing, LTD.
...

Other Papers Like Tad O’malley: the Investment Conundrum

The Tables Are Turning on the Fed. Here’s Why

671 words - 3 pages support that line of thinking. The FOMC mentions slowing growth, although more in inventory terms rather than spending and investment. It also mentions global developments but passes on balance-of-risk statements. However, if one were a little less optimistic, the repeated comments on the strength of the U.S. labor market might make one nervous. What the FOMC was in essence saying is that yes, the U.S. economy was slowing in the fourth quarter of

Financial Risk Management Essay

1021 words - 5 pages Brief Introduction of Financial Risk Management Financial risk management is an interdiscipline with various researching subfields including the studies of mathematical methods to maximum the profits, quantitative analysis of financial databases and investment decisions. In other words, it is aimed to bridge the gap between mathematical theories and practical financial analysing tools (Nawrocki 1999

Newspaper Annotated Bibliography

1327 words - 6 pages , 73, of Palm Beach County were charged, along with Colin A. Smith, 37, of Broward County. Franks and Smith were arrested, while Cavallo has yet to be apprehended. The defendants face charges of racketeering information for grand theft, fraudulent securities transactions, money laundering and unlicensed telemarketing (Ampel) "The victims in this case used their life-savings to participate in an alleged 'investment opportunity' only to be left

Case Study 5-1 and 6-1 (Mkt 201)

727 words - 3 pages MKT 201 Assessment III Case study 5-1 ; 6-1 Semester III (Sep 2 – Dec 17) Viktoriia Lebedieva Case 5-1 America’s Cuban Conundrum : The Assignment 1) What was the key issue that prompted the EU to take the Helms-Burton dispute to the WTO? The key issue that prompted the EU to take the Helms-Burton dispute to the WTO is the theory that law argues against the governments’ authority and the principle

Internet Retail : Technology Management

3422 words - 14 pages . Even though the effect of a high IT investment on the business’s performance has not been proved (Bharadwaj, 2000), these businesses, both the online-only stores and the “bricks and clicks”, are heavily investing in information technology (IT) infrastructures to conduct digital transactions and to capture more market segments. This leaves us with the following question – why is technological innovation perceived by these internet retailers as a

Small Business

2558 words - 11 pages . For instance, governments all over the world have realized that investments in the renewable energy sectors are urgently needed and hence have gone out of their way to ensure that there is a favorable “climate” for investment. The case of Solar Energy and Wind Power is instructive as these two sectors fall under the renewable energy programs launched by the governments in the US and UK. To encourage investments in these areas, the governments

America's Cuban Conundrum

1620 words - 7 pages America’s Cuban Conundrum 1. Analyze the key issue that prompted the EU to take the Helms-Burton dispute to the WTO The 1963 U.S. embargo was reinforced in October 1992 by the Cuban Democracy Act (the "Torricelli Law") and in 1996 by the Cuban Liberty and Democracy Solidarity Act (known as the Helms-Burton Act) which penalizes foreign companies that do business in Cuba by preventing them from doing business in the U.S. Justification provided

Marketwatch 101

5295 words - 22 pages fourth quarter of 2012 with a net income of $481 million, beating analyst forecasts of 10 cents earnings per share. However, return on equity was modest at 3.2% compared to that for Goldman Sachs at 11%. 1 2 The Volatility Conundrum, M Stainton- WIC Wrap Up 14th October The Great Rotation, W Caffrey- WIC Wrap Up 30th December Warwick Investment Club Research Team 3 January 20, 2013 Fortnightly Market Wrap -Up The banking

At&T the Multinational Congolmerate

1714 words - 7 pages gloves” and have attempted to take each other’s customers for this growing market space. Lastly, in the broadband marketplace, brand loyalty is a tad bit higher because AT&T’s competitors offer slightly different products. Both Comcast and Verizon offer competing packages to AT&T U-verse, but the channel selection is a little different and not exactly the same as their mobile phones segments compete. Since satellite providers such as Dish Network

Assess The View That Since 2007 The Assembly Has Been Successful In Holding The Executive Committee To Account

1667 words - 7 pages Executive Committee. An example which clearly demonstrates this was the committee for Enterprise, Trade and Investment who which in 2010-2011 recommended amendments to the Energy Bill. The committee advised alternative solutions to clauses in the Bill that related to reasons for power of entry of premises for gas companies and more. The recommendations for changes thus latter were accepted by the department and Minister Arlene Foster DUP and the Bill

New Leaders

4479 words - 18 pages not lend each other fearing that their money might be lost because the borrowing bank might have the toxic assets i.e. CDOs on its balance sheet; thus leading to a liquidity conundrum and worldwide scale financial crisis. Effect on Citi and Merrill Citi and Merrill both invested in CDOs via Special Investment Vehicles or SIVs. An SIV is a separate legal entity from its originator and is used to issue loans at relatively competitive market

Related Essays

Case Discussion Questions Essay

1951 words - 8 pages September 2008, would you recommend Washington Mutual’s covered bonds as an investment? Case study: Private equity and investment analysis Case: Tad O’Malley: The investment conundrum (9-808-125) Please review the case the three PowerPoint presentations. As you read over the material, consider how Tad should structure his presentation at the partners’ meeting? Among the issues you may wish to consider are: 1. which company should he

Busn 79 Finance Essay

630 words - 3 pages initial investment of the company comes up as a result of provision by Tad and his friends as well as family. Given that the initial investment of the company was somehow small, the company made a few surfboards just for its stores. Cash flow statements normally are known to show the amount of cash that comes into a company and the amount that goes out. Usually, this amount is determined over a given period of time say quarterly or annually. In most

Shortage Of Specialists In Emergency Room

1022 words - 5 pages , etc. (O’Malley, Draper, Felland, Nov. 2007). “One Miami hospital puts payment for physicians’ time spent providing on-call coverage into a tax-deferred investment account that is vested after five years as life insurance. Other hospitals are paying for physicians’ malpractice premiums in return for on-call coverage or are cross-subsidizing premiums as a way to keep on-call specialty services available,” (O’Malley, Draper, Felland, Nov

Enviromental Law Essay

4010 words - 17 pages Case 2 – Erhardt - O’Malley – Spring Water Company The case in question shows is a great example of the importance in knowing our beautiful country’s laws. This case specially touches on Canada’s Environmental Law and how with time its importance has come into effect. Its development and evolution from the 20th to 21st century has introduced and adopted multiple new legislations to follow our society’s evolution. The goal of this case’s