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Welcome to our support website for the business case “Private Equity Achieves Returns through Operating Improvements: CD&R's Acquisition and Turnaround of Hertz”.

Read an inspection copy of the case.

 

Summary

Private equity firm Clayton, Dubilier & Rice (CD&R) is preparing a bid for leading US car rental agency Hertz. By replacing Hertz’s top managers, improving capital management and driving down operating costs, CD&R sees an opportunity to nearly double EBITDA. However, the turnaround involves significant risks, which CD&R must weigh in preparing its bidding strategy. Students are required to assess and value the business, evaluate a post-acquisition operating turnaround plan requiring new leadership, select a financial structure to mitigate significant cyclicality, and craft a winning bidding strategy in the context of a competitive auction.

 

Teaching objectives

This case underscores the importance of creating a differentiated investment thesis (no matter how slight the advantage) in a competitive auction setting, inviting students to develop and support their own investment thesis. It demonstrates how the operating capabilities of PE firms (like CD&R) translate into a valuation exercise, investment thesis and operating plan. It explores how the firm’s strategic bent shapes its bidding strategy and willingness to pay for a business that has the prospect of achieving high returns for its fund, as well as identifying sources of advantage in deal sourcing, expertise partnering and turnaround management in the private equity domain.

 

How to buy the case

  • Hard and soft copies of the case and teaching note (which contains the login and password to access the private area of this site) can be purchased via our distributors’ websites. To choose a distributor please visit the INSEAD Case Distributors page.
  • The case can also be purchased directly from INSEAD.
  • If you are not a registered instructor, follow the instructions on our distributors’ websites to identify yourself as such.

 

 

 

 


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