Frank is altogether uninterested in anything Rupert has to say until he reaches the relevant precedent transactions section. Kruelberg has a good track record of investing in the sector, and it is always difficult to pick the right precedents or to really tell them something they don’t already know.
Frank seems fine with all of the numbers, even commenting on the accuracy of the analysis and how consistent it is with their internal views. Rupert gives you an approving glance that either says “well done mate” or “lucky you, you didn’t mess up”. There’s a big smile of Frank’s face when he sees a very obscure transaction on the list of precedents – July 2004, Seven Seas Associates acquired by a consortium of private equity buyers. He asks Rupert to give him some more details and he does the usual blah around why they paid how much they paid, what a good asset it was and how it is nearing the holding period for the current owners and that it may even be available for Kruelberg to buy.
Frank chuckles and asks some more questions about how the business is performing, to which Rupert comes up with even more blah about how the sponsors who bought it have done ok, but there is so much more value to be extracted, how the management is great but the sponsors are limiting their ability to grow, how they overleveraged the business and now its starved for cash, and the list goes on.
Rupert begins to look a little out of his depth as frank keeps probing his knowledge of the Seven Seas deal and business and looks to you for help. You quickly open your backups book and page through to the precedent transactions full case studies for each deal. You find Seven Seas, and freeze. You cannot believe your eyes. You look up to Rupert, who is busy talking about how the current owners of Seven Seas are really a little bit of a group of muppets, and how what this business really needs is proper private equity ownership, not the mickey mouse excuse for financial sponsors who make up its current board.
You look back at the page and cringe as Rupert continues bashing the deal, as the first bullet point on the deal description reads:
“A consortium of private equity investors led by Kruelberg Kretin acquired Seven Seas…”