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  • July 2017
  • Case
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Centerbridge Partners and Great Wolf Resorts: Buying from a Highly Regarded Competitor

By: Josh Lerner, John D. Dionne and Amram Migdal
  • Format:Print
  • | Language:English
  • | Pages:25
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Abstract

The case examines the March 2015 Centerbridge Partners investment decision regarding whether to acquire Great Wolf Resorts, a North American family-oriented indoor water parks and hotel operator, from a private equity (PE) competitor, Apollo Global Management. The case allows for discussion of strategic and financing considerations by Centerbridge, a New York–based investment firm employing a flexible approach across investment disciplines: private equity (PE); credit, distressed strategies, and special situations; and real estate. Students are presented the opportunity to perform valuation analysis and compare two possible forms of financing for the potential acquisition: 1) traditional corporate debt and bond financing and 2) commercial mortgage-backed security (CMBS) financing. Strategically, the case poses the following questions: Was Centerbridge valuing Great Wolf correctly? Would CMBS be the optimal financing structure, and why had no other firm contemplated this type of financing? Would the company, in partnership with Centerbridge, be able to execute on operational improvements and growth strategy? Was the purchase price multiple of 9.4x warranted in light of the opportunity set? Would an established PE firm like Apollo ever leave enough on the table for a successor private-equity owner to generate gains without necessary multiple expansion?

Keywords

Private Equity Financing; Commercial Mortgage Backed Securities; CMBS; Secondary Buyouts; Business Ventures; Acquisition; Finance; Borrowing and Debt; Cost; Cost of Capital; Equity; Private Equity; Financial Instruments; Debt Securities; Accommodations Industry; Entertainment and Recreation Industry; Financial Services Industry; North and Central America; United States

Citation

Lerner, Josh, John D. Dionne, and Amram Migdal. "Centerbridge Partners and Great Wolf Resorts: Buying from a Highly Regarded Competitor." Harvard Business School Case 818-023, July 2017.
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About The Authors

Josh Lerner

Entrepreneurial Management
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John D. Dionne

Finance
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Related Work

    • July 2017
    • Faculty Research

    Centerbridge Partners and Great Wolf Resorts (B)

    By: Josh Lerner, John D. Dionne and Amram Migdal
    • December 2017
    • Faculty Research

    Centerbridge Partners and Great Wolf Resorts: Buying from a Highly Regarded Competitor

    By: Josh Lerner, John D. Dionne and Amram Migdal
Related Work
  • Centerbridge Partners and Great Wolf Resorts (B) By: Josh Lerner, John D. Dionne and Amram Migdal
  • Centerbridge Partners and Great Wolf Resorts: Buying from a Highly Regarded Competitor By: Josh Lerner, John D. Dionne and Amram Migdal
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