Case Number: 5-107-002, Year Published: 2007
HBS Number: KEL168
Leveraged Buy-Out, Mergers and Acquisitions, Corporate Finance, Restructuring
The case simulates the experience of a private equity investor evaluating a potential investment, requiring the student to: (1) determine the risks and merits of an investment in Toys “R” Us, (2) evaluate the spectrum of returns using multiple operating model scenarios, and (3) identify strategic actions that might be undertaken to improve the risk/return profile of the investment. The case also discusses trends and participants in the private equity industry.
To understand how private equity firms analyze investment opportunities through application of an LBO model (provided in the case) that summarizes returns and risks. Also, the case provides an opportunity for students to review private equity participation in club deals, large (and early) dividends, and IPOs.
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