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A Summary On Private Equity Essay

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Private Equity Weiwei Zhu FleetCor Deal Summary: As a Managing Director at Summit Partners, I have received an investment proposal of FleetCor deal from the deal team-- To invest 44.9 million in FleetCor for an ownership position of 46%, in the form of convertible preferred stock with an 8% accruing yield. This memo includes all my concerns for this deal. Good Business Framework: • Market Position: Strong FleetCor is one of the largest issuers of commercial fleet fuel “purchase cards” in the US. Targeting the middle market, it’s positioned to achieve leading market share, as most competitors focus on upper-end market. Also, FleetCor has advantage of local market distribution. Competitors do not have such cost structure or infrastructure to support an entry into the middle market. Thus, compared to current and potential competitors, FleetCor can be a leader in this market segment. • Market Growth & market share trends: Very Positive The total market size for commercial FleetCards is 2 billion. And according to Bain market sizing studies, the market of FleetCor can be $500 million, big enough for potential IPO. The market expansion and growth are strong, even stronger with consideration to related services such as roadside assistance. Especially the middle market had undervalued penetration. Card penetration in the upper-end market is 75%, while only 25% in the middle market, which indicates a huge space for expansion and growth. Thus, FeetCor is very likely to
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