Private Equity Firm Carlyle Group to Exit Banking Business ...

Case Type: private equity/investment; mergers & acquisitions.
Consulting Firm: Cognizant Business Consulting (CBC) first round job interview.
Industry Coverage: banking; financial services.

Case Interview Question #00341: Your client The Carlyle Group is a global private equity and asset management firm based in Washington, D.C., United States. With assets in excess of $150 billion under management diversified over 84 distinct funds, Carlyle was ranked as the third largest private equity firm in the world, after TPG Capital and Goldman Sachs Capital Partners as of 2011.

The Carlyle Group owns a large bank called Community One Bank which has 63 branches in North Carolina. In wake of the recent financial crisis, Carlyle wants to get out of the banking business. With $100 million in losses, the top management team hopes to find a new business to acquire, against which they can offset the losses (losses carry forward). You have been retained to recommend an acquisition candidate for the client. How would you go about it?

Possible Solution:

I tried to solve this investment/private equity case using a two-stepped approach.

Step 1: the client needs to find a well performing company in an attractive industry that will meet its financial objectives.

The new company?s net income within the next 15 years should be sufficient to cover losses of the failing banking business. Long-term attractiveness is important, because once the losses are written off, the client must be able to sell this new business at a good price (if Carlyle Group desires so).

The industry is important so that the current bank capabilities can be leveraged (expertise in customer research, geographical spread, etc). Since there are significant requirements to the new business?s profitability, most start-ups are not viable alternatives in this case.

Step 2: understand if the banking business has sufficient capabilities (management and other) to run a diversified company so that cost of complexity does not exceed the benefits of diversification.

Source: http://www.consultingcase101.com/private-equity-firm-carlyle-group-to-exit-banking-business/

wilco daredevil daredevil sneakers sneakers microsoft security essentials microsoft security essentials