Palamon Capital PartnersTeamSystem S.p.A Harvard Case Solution & Analysis

Palamon Capital Partners Team System S.P.A


Louis Elson is reflected on the international private equity industry and the investment process. In 1990, Louis Elson started working with private equity and later on he joined E.M Warburg Pincus and Co. Then he started focusing on the European transaction and later on he got permanently located in Europe. In 1995, Elson became an integral part of the team that built the U.S dollar and he became the partner of the Warburg. For firm there is USD 1.3 billion portfolio of equity investment and there are more than 40 investments in the portfolio. Elson and Michael Hoffman who are partners saw unique growth of the European private equity industry. Elson and Hoffman recruited additional partners and they made the Palamon capital partners. Elson is managing partner of the UK based private equity firm, Palamon capital partners

Elson and Hoffman made the Palamon teen with the required experience and their required experience should be in the private equity, investments banking corporate finance and management consulting. There main original vision is to provide a unique risk profile and the substantial long term returns.

In the private industry there are usually three sector and they are as follows:

  • Venture capital funds focus on the high risk on the early stage of the investment.
  • Generalist private funds provide an expansionary funding and allow to transition from small and private companies to go for the public.
  • Leverage buyout funds acquire the business by management and it will take place when the company has capacity to take debt.

Private equity is funded by individual investors, pension funds and endowments who are generally interested in the higher risk and higher return.

Problem statement

Palamon is considering investing in the Team System. Here the Palamon needs to consider whether this investment in Team System will be feasible or not. For that we need to perform the valuation of the investment in Team System and not only the valuation but we also have to see the other non financial factors of the investment as the investment is in Italy so there may be certain risk related to the different country, culture and environment. So Palamon needs to consider all the issues before investing in the Team System in Italy.

Qualitative Analysis

Private equity is not on the public exchange. In private equity investing, investors will not invest in the public companies and they directly invest in private companies and they may conduct the buyouts of the public listed that result in the de-listing of public companies. The people who participate in the private equity are venture capital, angel investor, generalist private funds and leverage buyouts funds and each one of them has different goals sets and approaches as well as their own strategies but their role is to invest in the company for the expansion of the company, new development, restricting the management operation or the company.

All participate investing in the private equity that has a different perspective but the aim is almost same which is to the finance companies for different purposes. Palamon is positioned on the generalist private funds in the industry, generalist private equity funds provide the funds for the expansionary or transitional funding that will enable the small companies to go for the public companies so Palamon is also like the generalist equity funds, it makes the investment bridge in those companies that wanted to move from small, private to the public capital markets as this is the Palamon’s investment strategy.

Private equity is different from the public equity, public equity is listed on the stock exchange whereas the private equity is not listed on the stock exchange and private equity does not need to follow the rules of stock exchange whereas; public equity have to follow this and public equity shares are issued to public but private equity cannot issue shares to the public. In private equity company founder is owned the company. There is a huge difference in between the public and private, which is related to disclosure of private equity. Public company needs to issue as its required by law and disclosure is must for public equity as it is trading on the stock exchange and this information will be available to the shareholders and the public but there is no such requirements for the private equity investing companies.

 Palamon is interested in the Team System as it is considering it a good investment opportunity because Team System is in the industry where there is an extreme fragmentation constantly changing regulation. As per the history its seems that government has adjusted the policy four time in a year and the Palamon is considered as ripe opportunity to invest in the company and when the small companies needed to respond the legislative volatility  then investment  will be capitalized. Palamon approached two leading players but as such that company is not suitable to Palamon and Team System ...........................

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In February 2000, the managing partner of a British private equity fund, Palamon Capital Partners, faced a decision on whether to invest in the Italian software company, TeamSystem, SpA rationale for these investments was a belief in the future of the industry fast consolidation of enterprise software in Italy, in conjunction with improved operating performance is considered resulting strong investor orientation after the transaction. The transaction resulted in a leveraged recapitalization target that could substantially change its ownership, control and leverage. The challenge for students is to assess the attractiveness of investment based on a strategic assessment, evaluation target with his new cap, and an assessment of the proposed transaction structure.
This Darden study. "Hide
by Robert F. Bruner, Chad Rynbrandt, Sean Carr Source: Darden School of Business 20 pages. Publication Date: May 21, 2001. Prod. #: UV0091-PDF-ENG

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