Template scenario/Industrial services · leveraged buyout
Pre-Close · Cardinal ReliabilityA private equity simulation for incoming CEOs
You take the CEO seat of a company being bought with debt. Build the value creation plan the investment committee will back, inside the covenant, with the management team you inherit.
What you inherit
Revenue
$180M
EBITDA
$28M
~16% margin
Net leverage
5.3x
Cash
$5M
Market signals
Competitor
Apex Industrial Services bids aggressively for discrete-manufacturing maintenance contracts
Competitor
Summit Reliability Partners, a PE-backed roll-up, keeps buying regional independents
Market
Industrial reliability services: a $22B market growing about 4% a year
- Your seat
- Incoming CEO
- Industry
- Industrial maintenance
- Rounds
- 4 sprints around the close
- Stakeholders
- 12, each with an agenda
The situation
Where you start.
Cardinal Reliability keeps process plants, power utilities and factories running: predictive maintenance, plant turnarounds and reliability engineering. It is a good business with tired ownership, about $180M of revenue at a 16% EBITDA margin.
Brycewood Capital is acquiring it in a leveraged buyout, putting about $154M of debt on roughly $28M of EBITDA. Net leverage opens near 5.3x against a 5.5x covenant, which leaves almost no room for a bad quarter.
You are the incoming CEO. The investment committee will not release the equity until it believes your value creation plan.
Your mandate
- Grow EBITDA from about $28M toward the mid-40s, without starving the business
- Stay inside the lender's covenant, and the board's tighter guardrail
- Win over the management team you inherited, not the one you would have chosen
Pressing on you
- A rival is bidding aggressively for one of your key accounts
- A $154M debt load at 8.5%, tested every quarter
- A CFO and a COO who have run the business for a decade
- A value creation budget released sprint by sprint
The people
Who you will deal with.
Each has a background, a way of speaking, and an agenda of their own. Select a portrait to meet them.
And many more.
How it works
Your first round in the business simulation.
- 01
Get to know the situation
Read the briefing on Cardinal, the deal and the debt, and the five messages already waiting: from the sponsor, the CFO, the lender, sales and operations.
- 02
Work with your team and key stakeholders
Meet the management team you inherited, test your thinking with the CFO and COO, and keep the sponsor and the lender close.
- 03
Make your decisions
Choose up to three initiatives, set targets and a budget, and write your value creation plan for the investment committee.
- 04
Get support along the way
Your chief of staff, an operating advisor from the fund and outside advisors you can bring in help you weigh the options before you commit.
Deliverables
What you deliver.
Sprint 1
A value creation plan the committee can underwrite
The EBITDA bridge, the path down from 5.3x, your call on the inherited team, and the risks you carry.
Every sprint
Where the money goes
Up to three initiatives across cost, talent, product, capital, partnerships or account defence.
Every sprint
What you will not do
Your trade-offs, stated and explained.
Skills
Skills it builds.
- 01
Value creation planning
Building an EBITDA bridge and a leverage path under a covenant.
- 02
Leading an inherited team
Working with senior people you did not choose, who know the business better than you.
- 03
Sponsor and lender relations
Managing an investment committee and a lender through a buyout.
Built for
Run Pre-Close with your team.
As a workshop, async or a programme.