Client: a private equity fund.
Question: should the fund buy Ashgrove Clinics, a chain of 30 physiotherapy clinics, and at what price? The fund needs at least 2x its money in five years.
What you have: reported earnings and two items that need adjusting, the market multiple, the growth plan, and the debt the fund can use.
Done looks like: adjusted earnings, the entry price, year-5 earnings, the return with and without debt, and a recommendation. All figures are fictional.
Private equity cases ask whether a fund should buy a company. The fund cares about one thing: how many times its money it gets back at exit. The usual steps:
- Quality of earnings: take one-off gains out of EBITDA, and add back costs that are missing (such as an owner paid below market).
- Entry price = adjusted EBITDA × multiple.
- Value creation plan: what raises EBITDA over the holding period (new sites, pricing, costs).
- Exit = year-5 EBITDA × exit multiple. Money multiple = equity at exit / equity put in.
- Debt raises the equity return because the fund puts in less of its own money, and adds risk.
Commercial due diligence also checks the market and competitors; this case focuses on the numbers a partner asks for first.