Palmon Capital Partners/ Teamsystem SPA

P R E S E N TAT I O N

Group 3 Darden Business Publishing

 1 Problem 1

How is Palamon positioned in the industry?

Answer
• Palmon Capital Partner (PCP), was founded by Elson and Hoffman, and
two recruited additional partners.
• They earlier raised the amount of EUR 440 Million and provided them
substantial long-term returns.
• They have positioned themselves as a Generalist venture capitalist who has
invested their funds in companies to help them grow and to go public.
• This strategy allows them to exit when required by IPO or through
acquisition by a strategic investor.
 1 Problem 1
How is Palamon positioned in the industry?

Answer
CONTD:-
• They have invested in all continents and across industries.
• Company generally goes for the controlling stake 20-60% stakes by
investing between 10 to 50 Million Euro.
• These capitalists help the firm by providing the managerial and financial
requirements.
• Investment Horizon 5 to 7 years.
 2 Problem 2
Why is Palamon interested in TeamSystems? Does it fit with
Palamon's investment strategy??

Answer
• Teamsystems falls into the investment strategy of Palamon, the reason being
its fitment with Palamon’s investment strategy; further, the condition in the
Italian market was favorable to Teamsystems, which are as under:-
• They were growing rapidly, and also, the market was highly volatile.
• It had NO DEBT.
• Its CEO had already grow a lot of business.
 2 Problem 2
Why is Palamon interested in TeamSystems? Does it fit with
Palamon's investment strategy??

Answer - CONTD
• They were 1st in their category in their country.
• The Italian currency was growing compared to Euro.
• The business was scalable, and variable cost for the business is generally
low.
• High customer retention rate due to the business model.
• Customers have high lifetime value.
3 Problem 3
How much is 51% of TeamSystem's common equity worth? Use both a
discounted cash flow and a multiple-based valuation to justify your
recommendation.

Answer - CONTD
• They were 1st in their category in their country.
• The Italian currency was growing compared to Euro.
• The business was scalable, and variable cost for the business is generally
low.
• High customer retention rate due to the business model.
• Customers have high lifetime value.
3 Problem 3
How much is 51% of TeamSystem's common equity worth? Use both a
discounted cash flow and a multiple-based valuation to justify your
recommendation.

Answer - CONTD
• They were 1st in their category in their country.
• The Italian currency was growing compared to Euro.
• The business was scalable, and variable cost for the business is generally
low.
• High customer retention rate due to the business model.
• Customers have high lifetime value.
 4 Problem 4

What should Louis Elson recommend to his partners? Is it a go or not? If it is

a go, what nonprice terms are important? If it's not a go, what
counterproposal would you make?

Answer -
• As per the excel file attached, it is exhibited that the firm has a current value
of EUR 70 Million, compared to the investment amount of EUR 26 Million.
• However, there are some nonprice issues that need to be addressed before
making of a proposal
 4 Problem 4

What should Louis Elson recommend to his partners? Is it a go or not? If it is

a go, what nonprice terms are important? If it's not a go, what
counterproposal would you make?

Answer - CONTD
• Management Team:- The current management team is incapable of steering
the company through IPO.
• Income Tax inspection: - Before going to the public, the company needs to
adhere to the proper guidelines, and this inspection poses issues to the
company and its great valuation. Further, the company has not gone under
Audit
 4 Problem 4

What should Louis Elson recommend to his partners? Is it a go or not? If it is

a go, what nonprice terms are important? If it's not a go, what
counterproposal would you make?

Answer - CONTD
• for the past five years; hence, their financials might have some fishy entries.
• Exchange rate risk:- It has benefited the firm to acquire positive growth in the recent
past, but the same may cause problems.
• Regulatory limitations:- Purchase by a foreign company can be put under restriction
(Recent case of the Indian government, during COVID time).
 Our Team
Thanks You

Madhav Vishal Amar Rakesh S Kartik Mohit

Tapadia Gupta Dhoot Mathur
MBA07148 MBA07232 MBA07186 MBA07221 MBA07140 MBA07214