IMD-1-0269 © 2009
Leleux, Benoit F.; Lachowitz, Jonathan
He was negotiating the next round of financing for the business that a team of fellow managers, and also he, had acquired through a management buyout in the fall of 2001.
At that time, a leading European buyout group, RIFE Capital, acquired bulk and control ownership in Kooltex. Since that original buyout, the business’s sales had doubled and its particular EBITDA had been multiplied by three to roughly CHF 22.9 million, or about €14 million. Originally, the entire management team had acquired some 15% of the equity in the first transaction and negotiated a significant exitbased incentive strategy; they stood to profit handsomely from the secondary buy out which was priced at a level that will trigger most of the ratchets in the performance incentive.
The liberty to operate, as well as the added financial resources obtained via the buyout financing, had enabled them to unleash an ambitious growth and profitability strategy, leading the company to notable market share increases against larger rivals in Europe and North America. Learning objectives: Using Monte Carlo simulation to value complex, non traditional options, like management stock option plans in the context of buy outs.
Subjects: Valuation; Option pricing; Monte Carlo simulations
Settings: Switzerland; Textile and Fiber Production; 120 employees; 2007
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