Ref: IMD-3-2047

Case study

Reference: IMD-3-2047

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Carlyle Group and the AZ-EM buyout (A2): Due diligence

Private equity managers are asked to make some of the most complex and gutsy investment decisions. Before any deal is completed, an information gathering and analysis process called due diligence is conducted to assess both the future upside of the potential investment and the possible downside.

The Carlyle Group was known as one of the most data-intensive private equity investors in the industry. Carlyle’s due diligence process in assessing the AZ-Electronic Materials (AZ-EM) deal was typical of its rigorous approach.

The due diligence process was significantly outsourced, with outside specialists hired in key administrative and operational areas and given very specific instructions by the private equity team. The due diligence conducted to evaluate AZ-EM was particularly intensive because the deal was a carve-out where the accounting and operational records had to be disentangled from those of the parent organization (Clariant). It was orchestrated by Robert Easton and Zeina Bain. The expanded team included not only members of The Carlyle Group and its operating companies, but also Ken Greatbatch, a carve-out specialist, and some 100 other external advisors from Clifford Chance, PwC, A.T. Kearney, ERM, Aon and Accenture.

Additionally, UBS, the investment banker, was involved as the potential arranger and syndicator of the debt financing.

Learning Objective

  • Buyout
  • Due diligence
  • Managing transition
  • Turnaround management
  • Leverage
  • Incentives
  • Restructuring
KeywordsBuyout, Electronics, General Management, Leverage, Private Equity, Turnaround
Settings2004-2009
TypeField Research
Copyright©2009
LanguageEnglish
Related materialTeaching notes, video
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Reference: IMD-3-2047

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