What are the pros and cons of Carter’s as an acquisition target for a private equity firm? Is it an opportunity that you would pursue if you worked at Berkshire?
LBO and Carter
1. What are the pros and cons of Carter’s as an acquisition target for a private equity firm? Is it an opportunity that you would pursue if you worked at Berkshire?
2. Attached please find an LBO model template. Please do the following:
Set your excel to iterate calculations
Input summary projections for Carter’s, as per the case
Input a financing structure, using Goldman Sachs’ proposed staple financing in the case and related interest costs
Input a purchase price
Input an exit multiple
Through trial and error, find a purchase price that leads to an IRR of 25% assuming an exit in 2005
Post your implied purchase price and discuss your willingness to buy Carter’s at this level.
