Case | HBS Case Collection | November 2012 (Revised January 2014)

HCA, Inc. LBO Exit

by Victoria Ivashina

Abstract

This case discusses the events following the 2006 $33.2 billion buyout of Hospital Corporation of America (HCA) by a consortium of private equity firms, including Bain Capital, KKR, and Merrill Lynch's private equity arm. The case highlights some of the core features of private equity investing. The first objective of the case is to allow students to understand a range of issues associated with the process of exit through an initial public offering. Understanding the economics of leveraged recapitalizations— including leveraged dividend payouts to financial sponsors and the opportunistic 2011 repurchase of Merrill Lynch's $1.5 billion stake—is the second objective of this case. The case protagonist is the management of HCA.

Keywords: entrepreneurship; finance; stockholders; dividends; Private Equity; Initial Public Offering;

Citation:

Ivashina, Victoria. "HCA, Inc. LBO Exit." Harvard Business School Case 813-056, November 2012. (Revised January 2014.)