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Authors: Matthias Brauer (University of Mannheim); Martin Zimmermann (University of Mannheim); Tobias Ursprung (Independent Author)
Originally published in: 2017
Revision date: 04-Apr-2017

Abstract

In 2002, the Swiss Zellweger Luwa Group decided to divest its textile measurement division USTER. Besides being highly profitable, USTER was a global leader and well-known brand in the textile manufacturing market, making it a very attractive target for strategic buyers as well as private equity firms. The case illustrates the buyout from the perspective of the buyer consortium that consisted of two private equity firms, Capvis and Quadriga. It describes the pre-buyout phase in which the consortium participated in the bidding process. Capvis and Quadriga had to build up a reputation as a credible consortium and had to analyze the investment opportunity from various perspectives to determine if USTER was an interesting investment case. Moreover, the consortium had to ensure debt financing and determine a bidding price that was high enough to be competitive but also provided potential for adequate returns and accounted for the risks involved, for example the cyclicality of the business model.

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Abstract

In 2002, the Swiss Zellweger Luwa Group decided to divest its textile measurement division USTER. Besides being highly profitable, USTER was a global leader and well-known brand in the textile manufacturing market, making it a very attractive target for strategic buyers as well as private equity firms. The case illustrates the buyout from the perspective of the buyer consortium that consisted of two private equity firms, Capvis and Quadriga. It describes the pre-buyout phase in which the consortium participated in the bidding process. Capvis and Quadriga had to build up a reputation as a credible consortium and had to analyze the investment opportunity from various perspectives to determine if USTER was an interesting investment case. Moreover, the consortium had to ensure debt financing and determine a bidding price that was high enough to be competitive but also provided potential for adequate returns and accounted for the risks involved, for example the cyclicality of the business model.

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