Cinven presentation (PE)

Question 1

How do PE funds generate value?

Answer 1

Ebitda growth (which is split in revenue growth 2/3 + cost reduction 1/3 and accounts for 80% of total value created) + multiple arbitrage (buy low sell high) + Deleveraging

Question 2

what’s the funnel for investment opportunities in a PE fund?

Answer 2

100 assessed–> 60% early rejects due to sale of minority, size and busines sprofile, or valuation and require minimal work. other 20% is composed of medium and high focus rejects which require a lot of resources. out of the final 20% just few actually result in a real transaction.

Question 3

which types of DD exist? what is their objective?

Answer 3

Commercial: verify market, business plan and positioning
Financial: verify that reported financials are thruthful
Operational: verify quality of processes and identify areas of improvement
Legal: Review contracts that bind the company and identify possible legal risks/liabilities
tax: review tax fillings and risks
ESG