Case study
A leveraged buyout firm wanted to acquire a regional cable TV company, but only if it could then successfully diversify into long distance telephone service. After assessing the target and the long distance market, we recommended that the firm buy the cable company. Two years later, our client resold the company for a substantial profit.
Increase in original equity
IRR
EquityCo*, a leveraged buyout firm, was considering purchasing TideTV, a regional cable company. EquityCo's plan was then to diversify beyond the cable television business into the long distance telephone market. This seemed to represent a promising growth opportunity, but was it realistic?
With a one-month evaluation window, Bain focused on four key areas to quickly determine the economic value of purchasing TideTV and the likelihood of its successful entry into the long distance market.
Bain concluded that TideTV could succeed in the long distance market and recommended that EquityCo proceed with its plan.
EquityCo purchased TideTV and sold it less than two years later for 2.5x the original equity and realizing a substantial IRR.
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.