Martin Smith

2296 Words10 Pages
This report is to discuss about the reason why Yellowstone Cattle Bank (YCB) will be the prefer transaction. The first part will analyse which type of leverage buy out (LBO) YCB belong to, thus find out the ways to get success in this transaction theoretically. The second part of this report will elaborate and analyse the pros and cons by choosing YCB surround different steps of whole transaction.
Define the type of deal in YCB transaction
According to the information provided by the case and the definition of variety of Private Equity investments, in this case Yellowstone Cattle Bank is involved in both Platform roll–up and growth LBO.
From the information that provided, YCB is operated in a fragmented and consolidated
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However luckily Marten is under a legendary senior partner Sandy, the reputation of Sandy will become an advantage in this deal, it can massively reduce the chance that Marten get drive off by the CEO.
After have a meeting with the CEO, investment capital will be the main concern in this stage. Compare with the other two transactions the price of Yellowstone Cattle Bank equity1 is the cheapest and even can achieve the level to use the word attractive. In this case due to the cheaper price of YCB, it reduces the pressure by seeking the investment capital. On the other hand because of the industry essential and business model, it is impossible that YCB would carry a large amount of debt. From the Newport’s view of point it is good news for them to infuse the debt to buy out this company by using the LBO method.
After the consideration of initiate investment capital, the next step will be managing the company. The background illustrated that YCB was the 44th largest payment processing company by volume and the operating income reach 10.1 million. According to the European Commission standard (Apx.1) YCB can be defined as a medium size company, from the Newport’s point of view this transaction compare with the other could
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