A Private Equity Deal: The Case of Invisible Ink

Abstract

Invisible Inks is established in the 1950s as part of Lechler. The company’s life as a distinctly incorporated entity begins in 2005 through the spin-off of the industrial inks business of Lechler. In October 2005, ABC Equity Fund acquires a controlling stake (80.9 %) in the company via a transaction structured as a leveraged buyout. In April 2011, ABC Equity Fund increases its stake to 100 % through the purchase of all outstanding shares in Invisible Ink. In September 2006, the company acquires Provis, a Dutch/French manufacturer of screen printing inks for graphic and industrial applications. In August 2007, the company acquires GFK, a producer and distributor of screen printing inks and emulsions for graphic and textile applications. In 2009, GFK is merged into Invisible Ink. In 2008 and 2009, as a consequence of the global economic crisis, the company faces a deteriorating macroeconomic environment and the shrinking of the market for screen printing inks. For these reasons, Invisible Ink re-negotiates the loan pool with the original consortium of banks. At the beginning of 2012, ABC Equity Fund plans to exit from the Invisible Ink investment. The related assessment of the enterprise and equity value of the company is performed.

Dr. Elvira Anna Graziano (PhD candidate in Banking and Finance at the University of Rome Tor Vergata) has contributed to the preparation of the present chapter. More specifically, Sect. 4.2 is attributable to Francesco Baldi. Sections 4.1, 4.3 and 4.4 are jointly attributable to Francesco Baldi and Elvira Anna Graziano. The author thanks Paolo Santoro for providing the material needed for the development of the case study.