M&A guest lecture Flashcards
What is the AUM of Lehman PE?
30B
What’s unique about the founders’ involvement?
The two founders (Alvarez and Marsal) have a personal stake in the fund.
What type of companies do they typically target?
Mid-caps from small-cap, family-owned businesses.
What’s their investment focus in terms of growth and profitability?
They only invest in profitable companies that they can grow.
What size of investments do they typically target?
Companies up to €300 million, stable markets, mainly in Western Europe.
hat is their operational style?
Hands-on and measured involvement — they often replace management.
What’s the CEO turnover in portfolio companies?
40%
Which types of industries do they prefer?
Specialist industries with niche components and high margins
B2B over B2C (more stable and less consumer-exposed)
Cybersecurity and healthcare are favored (stable and growing)
What is their core investment strategy?
Buy & Build
What are two key elements they look for in a deal?
Chemistry with the team
Alignment of vision
What are risks in family businesses?
Hard to remove founders; high risk when bringing in new management.
Why is due diligence crucial for them?
o deeply understand the company and price the risk accurately.
What role does the third-party chairman play?
Bridges the gap between the founder and the new management mindset.
What tool is often included in management incentives?
Executive incentive plan.
What is the average portfolio holding period?
3 years.
What do they typically do with cost savings?
Cut costs but reinvest them into the business.
Do they deleverage the companies?
No — they tend to reinvest instead of deleveraging.
How do they buy compared to the market?
Buy at ~8.0x EBITDA vs. average market multiples of 8.5x–9.0x.
How is the team structured?
by country
What is their involvement at the board level?
Usually board observers — no voting rights.
Do they manage the business directly?
No, they support and help improve M&A execution.
What aspects do they help integrate post-acquisition?
Culture, systems, and management.
What criteria are used when replacing management?
Executives they’ve worked with before
Proven good managers
Focus on value creation
