The case “Palamon Capital Partners/Teamsystem, S. P. A” discusses private equity investing, similarities and differences between public market investing and private equity investing, and position of Palamon as private equity investor. Special attention is paid to Palamon’s interest on TeamSystem, specific risks of the deal, future analysis and recommendations. Generally, private equity is defined as “an asset class consisting of equity securities in operating companies that are not publicly traded on an exchange”.
Investors and the funds directly invest into private companies or buy public companies. Venture capital, distress situations, leveraged buyouts and growth capital are the most common private equity investments. Private equity investments are argued to be one of the most effective ways to diversify company’s services. Due to them the companies are allowed to obtain necessary human and capital resources for monitoring investments themselves.
Palamon is one of the private equity investors investing throughout European industries. In contrast to many competitors, Palamon is generalists private equity fund that seeks investments that offer more risk than leveraged buyouts. The key difference between market and private equity investing is that they are provided with different degree of available information and data. In contrast to market investing, private equity doesn’t have to follow strict regulations on the type of information made available.
Therefore, the key benefit of private equity investing is information would be closed in case investor is interested in public equity company. Palamon is interested in TeamSystem S. P. A because it represents growth opportunity in fast-changing market. Palamon is going to purchase over 50% stake in the company to provide funding and management assistance. TeamSystem S. P. A is expected to transit from private to public ownership and to use Palamon’s resources for expansionary purposes. The offered 4-step strategy is attractive, but it may not be feasible.