The problem in the case deals with merger and acquisition. The buyer is Intercontinental Capital, Ltd.(ICL),and the target firm is Consolidated Supply S.S. (CSSA), a leading global supplier of medical products to hospitals and a subsidiary of AtlantisMed Systems, a major manufacturer of medical products and suppliers in the United States. The problem arises when ICL asked Deutsche Bank Securities to arrange the financing and propose a deal structure that would make ICL win against other four bidders. Hence, in this leveraged buyout, there are four main concerns needed to be considered, which are; 1. ICL required that bid prices would need to reflect at least 30 percent rate of return or IRR| 2. Deutsche Bank Securities must evaluate whether the deal will be worth the cost for ICL, or not| 3. Must make sure that ICL would get the deal by offering the most attractive price to CSSA and win the action| 4. ICL had to be sure what it would be able to pay back the principal repayment to Deutsche Bank in the future|
Next step to determine problem in the case is to identify key players. Key players in this merger and acquisition are:
1 Deutsche Bank,
2 Deutsche Bank Securities,
3 Intercontinental Capital, Ltd (ICL), and
4 Consolidated Supply S.S. (CSSA).
Each player has different role to play; thus, each of them faces with different responsibilities in the Leveraged Buyout (LBO) situation. Players| Responsibilities/ Problems|
1. Deutsche Bank| * Role: Provide funds to ICL in this leverage buyout * Problems: 1) must evaluate the risk whether ICL would be able to repay the loan and 2) In case that ICL defaults on its loan, Deutsche Bank must make sure that it will be able to stand against the default| 2. Deutsche Bank Securities| * Role: Leverage Buyout Advisor for * Problems: 1) evaluate proposed bid price2) help ICL reaches its objectives3) On top of this, Deutsche Bank...