Cinven: LBO in Action aquisition of ArcaPlanet

Question 1

How are investments to prioritise chosen for a PE firm?

Answer 1

Apply some filters:
1. Shape of the transaction
2. Size of the equity check
3. Sector/industry/thematic work
4. Market attractiveness & competitive landscape
5. Historical and forward-looking performance
6. Value expectations and process dynamics

Question 2

What do PE firms do when looking to acquire a company?

Answer 2

1. Due diligence
2. Business plan & LBO
3. Valuation
4. Financing
5. Legal/tax structuring

Question 3

What are the parts of due diligence?

Answer 3

1. Commercial (“CDD”)
2. Financial (“FDD”)
3. Operational/IT
4. Legal
5. Tax
6. Other (ESG, Insurance, Digital)

Question 4

What are the core cosumer investment criteria for cinven?

Answer 4

1. Structural growth driven by consumer Megatrends
2. Market Leadership
3. Differentiated consumer proposition
4. Positive ESG credentials
5. Leading Management

Question 5

What are the cinven calue creation levers?

Answer 5

1. Buy and build
2. Digitalisation
3. Best practice ESG
4. Band development
5. Margin Improvement
6. Internationalisation

Question 6

What made the arcaplanet deal an atypical PE transaction?

Answer 6

MaxiZoo was already under cinven, so the acquisition of arcaplanet resembled a “strategic” transaction. The synergies from maxi zoo also allowed cinven to be more competitive on price vs other PE

Question 7

What are the key touchpoints for the high yield bond process?

Answer 7

1. Engagement with potential lenders
2. Appointment of the banking syndicate
3. Signing of commitment papers
4. Drafting of Offering Memorandum
5. Meeting with Rating Agencia
6. Pre-marketing meetings with investors
7. Feedback from Rating Agencies
8. Lenders’ Presentation and Q&A sessions
9. Allocations and pricing of the bond