Case | HBS Case Collection | November 1992 (Revised May 1993)

BW/IP International, Inc.

by Timothy A. Luehrman and Andrew D. Regan

Abstract

Less than a year after completing a leveraged buyout of their own company, the managers of BW/IP International were presented with an attractive acquisition candidate. To buy the target company, however, BW/IP would have to borrow more money and take on more administrative problems at a time when its managers are already very busy. The case asks students to consider how BW/IP can convince its lenders that the acquisition is a good idea. Presents two straightforward valuation exercises. Also permits a careful comparison of the capital allocation processes at a large, low-leveraged, public company, versus a small, highly-leveraged, private company.

Keywords: Leveraged Buyouts; Leadership Style; Valuation; Resource Allocation; Capital; Public Ownership;

Citation:

Luehrman, Timothy A., and Andrew D. Regan. "BW/IP International, Inc." Harvard Business School Case 293-058, November 1992. (Revised May 1993.)