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This is the second of a three-case series (IMD-1-0202 to IMD-1-0204). In April 2002 Guy Semmens, a Partner in Argos Soditic, has to decide whether to take the lead in the management buyout (MBO) of Kermel, a niche player in the specialty fiber market. This case invites participants to consider an MBO from the perspective of the private equity investor and answer the following questions: (1) what is the fair value of Kermel?; (2) how to structure the deal to incentivise management while generating adequate returns; and (3) what would be the exit strategy? This case is interrelated with two other cases that focus on the other actors of the deal: Venkatesh Tulluri, who took the decision to engineer the MBO and would become Kermel''s CEO (Chief Executive Officer), and TCFG, the mergers and acquisitions advisor of Tulluri and Kermel''s management team. A video ''IMD-1-0203-V'' is available to accompany the case.