Case Scenario 3: Zachary, Wesley & Partners

question 35

Essay

Case Scenario 3: Zachary, Wesley & Partners.
Zachary, Wesley & Partners (ZW&P)is a leveraged buyout (LBO)firm that specializes in friendly buyouts of mid- sized U.S. retailing and manufacturing firms. ZW&P shuns turnarounds and hostile takeovers; its typical deals
retain the existing management team and provide extensive funding for what is perceived to be an already sound strategy. It focuses on this type of firm because the partners have good contacts in retailing and manufacturing and they are typically able to avoid bidding wars when the LBO is negotiated. The firm has been immensely profitable over the years, in part due to the very extensive and selective due diligence process used to winnow down the list
of prospective targets. Fewer than one out of one hundred candidates are even approached, and only a fraction of these passes further screens in the LBO negotiations. The resulting profitability has, in turn, given ZW&P a strong reputation in the financial community for successful deals, and among managers for being able to put together needed financing with good business plans.
-(Refer to Case Scenario 3). What factors may threaten the ability of ZW&P's resources and capabilities to generate continued success?

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Definitions:

Modular Homebuilder

A company that constructs homes in sections or modules in a factory setting, then transports them to a final location where they are assembled on-site.

Statement Of Cash Flows

The statement of cash flows is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company, showing how the company raises and spends cash.

Financial Statement

Documents that provide an overview of a company's financial condition, including income statement, balance sheet, and statement of cash flows.

Service Business

A type of business that provides intangible products or services to customers rather than physical goods.