The purpose of this case was to determine whether ACE Private Equity Partners, a middle-class private equity fund is, should purchase two physical therapy company, to develop them for subsequent sale to a larger private equity companies. This situation represents another opportunity for ACE to implement its general partner “merger consolidation” investment strategy for their fund investors or limited partners. This investment strategy was to buy several private companies in the same industry, d … Read more »

The purpose of this case was to determine whether ACE Private Equity Partners, a middle-class private equity fund is, should purchase two physical therapy company, to develop them for subsequent sale to a larger private equity companies. This situation represents another opportunity for ACE to implement its general partner “merger consolidation” investment strategy for their fund investors or limited partners. This investment strategy was to buy several private companies in the same industry, they develop for three to five years, with revenue growth and cost-saving synergies and then sell these larger consolidated company. This investment strategy was summarized by three major tactics: 1) build valuable companies through growth and consolidation, 2) use arbitrage for small businesses to lower private company EBITDA buy multiples and then sell it as a larger combined company with greater public company EBITDA multiples and 3 ) use the acquisitions with debt to diversify and enhance returns.
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from
Hugh Grove,
Tom J. Koch
Source: North American Case Research Association (NACRA)
10 pages.
Release Date: 15, January 2008. Prod #: NA0030-PDF-ENG
Private Equity Housing: Merger Consolidation HBR case solution