Solved HBR Case Solution: Francisco Partners By David Gallo (Download Now)

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2 min readApr 5, 2021
Solved HBR Case Solution: Francisco Partners By David Gallo (Download Now)

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Description

Solved HBR Case Solution: Francisco Partners By David Gallo (Download Now)

Solution Pages: 4

Files that you will download:

Word (.docx) & Excel (.xlsx)

Questions Covered in the Solution

1) Evaluate Deb and Stanton’s record as buyout investors at Texas Pacific Group (see Exhibit 1 and Francisco Partners.xls). Do you agree with Stanton that this is an “Exceptional” track record?

2) As an institutional investor, would you invest with Francisco at terms similar to those of other large bouquet funds (Exhibit 15)?

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Sample of Solution

1) Evaluate Deb and Stanton’s record as buyout investors at Texas Pacific Group (see Exhibit 1 and Francisco Partners.xls). Do you agree with Stanton that this is an “Exceptional” track record?

Most of the performance is based on the unrealized value of the firms. This is a large proportion as compared to the realized proceeds as they account for only around 10.2 percent of the total of realized and unrealized proceeds value. This does not prove it as an exceptional record as it is something with more of intangible value.

The IRR for almost all the companies is high, and this means that future expected cash flows are high as well. This is not a guarantee that these investments will work in the future, making it very subjective. IRR does not also curtail the cost of management fees, expenses and carried interest, including these will reduce the CF’s of the firm leading to a fall in the value of IRR. Hence, the IRR value is overestimated, giving an unfair picture of the situation.

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2) As an institutional investor, would you invest with Francisco at terms similar to those of other large bouquet funds (Exhibit 15)?

In order for Francisco partners to be attractive to institutional investors in an initial stage, it is important that the terms are favorable for them to invest.

The strategy of Francisco partners is best set to be investing in technology-related as Dave Stanton has more of an idea, and the potential returns are high in this case. They can also move towards the aspects of acquisitions and restructuring in order to increase options for the investors and to make the portfolio less risky and more certain. With time and improvements in the team skills, diversification can allow the chance to invest in other high return sectors according to the flow of the economy.

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