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- First Step to Final Offer 3/18/25
First Step to Final Offer 3/18/25
Brooks Gammill
March 19, 2025
Your weekly round-up of an M&A deal walkthrough, insightful market news summaries, technical quiz questions, and various internships, events, and diversity programs. A key resource to best prepare yourself for finance recruiting. If someone sent you the newsletter subscribe below!
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TECHNICAL QUESTION OF THE WEEK:
How do you determine how much Debt a PE firm might use in an LBO and how many tranches there would be? |
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MARKET NEWS
Bridgewater's Pure Alpha Fund Surges Amid Market Volatility
Bridgewater Associates' flagship fund, Pure Alpha, achieved an impressive 8.2% gain in January 2025, navigating a turbulent market characterized by sharp declines in tech stocks and economic uncertainties. This performance continues the fund's strong trend from the previous year, where it saw an 11.3% annual increase. Bridgewater's strategy involved significant investment in emerging global markets and diversifying portfolios, which proved resilient against the backdrop of fluctuating market conditions
Source: Bloomberg
Santander Set to Revolutionize U.S. Banking with Openbank
Santander is on track to establish a full-service digital bank in the U.S. by the end of 2025, driven by its successful European digital arm, Openbank. This initiative represents a strategic expansion in the American market, as Openbank aims to replicate its European success where it's known as a leader in digital banking with over €18.5 billion in deposits. Ana Botín, the Executive Chair of Santander, highlighted that despite previous advice to divest from the U.S., the decision to expand has proven pivotal. Openbank launched in the U.S. with high-yield savings accounts and plans to broaden its offerings to include a full suite of financial products like auto loans by 2025, capitalizing on its position as the fifth-largest auto lender in the U.S. The digital platform promises a user-friendly interface that simplifies banking, offering competitive rates and efficient service. As the bank integrates more services into its digital offerings, it anticipates benefiting from increased consumer demand and a recovering U.S. economic landscape, setting the stage for substantial growth in the coming years
Source: The Wall Street Journal
M&A DEAL OVERVIEW
Investcorp Acquires Majority Stake in Miebach
Investcorp, a global alternative investment firm, has acquired a majority stake in Miebach Logistik Holding GmbH, a top provider of supply chain and logistics consultancy services based in Frankfurt, Germany. Miebach, founded in 1973, specializes in developing and implementing supply chain strategies and engineering designs. With this acquisition, Investcorp aims to support Miebach's organic growth and M&A strategies, enhancing its service offerings and expanding its global footprint. Miebach's existing equity partners will retain a significant minority stake. The transaction is expected to close in Q2 2025.
Source: Investcorp
ADDITIONAL RESOURCES
LAST WEEK TECHNICAL QUESTION OF THE WEEK ANSWER:
Correct Answer: B, 20% — PE firm invests $50 in a leveraged buyout in Year 0 and takes the company public in Year 3. It sells 1/3 of its stake each year in Years 3 – 5, and its total stake is worth $100 in Year 3. Assume no changes in the value of the stake and estimate the IRR.
Explanation: To calculate the IRR (Internal Rate of Return) in this scenario, we start by noting the following: The private equity (PE) firm invests $50 in Year 0. By Year 3, its stake is worth $100. The firm then sells 1/3 of its stake each year in Years 3-5. Since the value of the stake does not change, the firm is selling portions of its $100 stake at equal value each year. In Year 3, it sells 1/3 of $100, which is $33.33. The next two years, it sells another 1/3 of the remaining stake. To estimate the IRR, we calculate the cash flows based on these sales, considering the investment of $50 in Year 0 and the returns from the sales in Years 3, 4, and 5. The IRR can be calculated by finding the discount rate that sets the net present value (NPV) of these cash flows to zero. Given the cash flows and the initial investment, the estimated IRR is approximately 20%.