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Ducati & Tpg

In: Business and Management

Submitted By agldj
Words 1107
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M&A (B) – Ducati & TPG

Question1: On a scale from 0 to 10, we would like to mark it with 2.
Answer:
TPG is overwhelmingly acting as a financial buyer.
Firstly, picking up Ducati as its target company is quite opportunistic. From the traditional investment style’s point of view, TPG is interested in those companies that had grown rapidly but still had the corporate structures of very small companies which caused great stress to the management of the business, and the assets of their target companies always being considered to be divided in order to improve the business riping for LBO. Besides, TPG is expecting to add complexity to the doing the deals and realize fiscal efficiency. Ducati is thus to be an ideal target from these perspectives.
Secondly, as the one of the clearest difference between a strategic buyer and a financial buyer is that the strategic buyer wants to “Buy and Hold” and the financial buyer tends to want to “Buy Low and Exit High”. TPG hold that Ducati is a high-value added business and a low cost producer, and TPG itself is a private equity fund and must eventually sell their investment to return capital and profit to their investors, so it is concerned about the eventual exit from their investment in Ducati, and TPG also conclude that an IPO of Ducati might trigger a higher price and trade sale, setting the deal structure suits IPO.
Last but not least, TPG also partially played a strategic buyer’s role. TPG is not only working for a good bid, but also a successful build out. As TPG planned to acquire controlling stake and take over operation of Ducati, they are thinking of finding a world class management team to renovate the business to the greatest extent, being more prone to build in some post-acquisition synergies.

Question 2: To value the 51% of Ducati that TPG is contemplating acquiring, outline the steps you would take. It

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