Case | HBS Case Collection | October 2007 (Revised January 2009)

The Hertz Corporation (A)

by Timothy A. Luehrman and Douglas Scott

Abstract

Examines the leveraged buyout of Hertz in 2005, a complex, high-profile deal and a good example of cutting-edge practice in private equity. The first of a two-part series on the Hertz LBO, adopts the perspective of Clayton, Dubilier & Rice, the leader of a private equity consortium bidding to buy Hertz from Ford in an auction. Set at the final round of the auction, the immediate problem for the consortium is how much to raise its previous bid. A reasonable bid must be based upon how much value the private equity consortium can create through improvements in Hertz's global operations on the one hand, and a more efficient capital structure on the other. Presents detailed descriptive information on both topics, but does not include detailed financial projections, which must be formulated by students or supplied, for discussion purposes, by the instructor.

Keywords: Leveraged Buyouts; Private Equity; Bids and Bidding; Negotiation Deal; Valuation; Value Creation; Financial Services Industry; United States;

Citation:

Luehrman, Timothy A., and Douglas Scott. "The Hertz Corporation (A)." Harvard Business School Case 208-030, October 2007. (Revised January 2009.)