LBS Team Wins 11th Annual Wharton Buyout Competition

Ten days ago, two teams traveled to Wharton, in Philadelphia, to represent London Business School at the 11th Annual Wharton Buyout Case Competition. The event, which hosts teams representing top US business schools including Wharton, Columbia, Harvard and Kellogg, revolved around a hypothetical private equity buyout case. Four days prior to the competition, participating teams were emailed something very simple in the middle of the night: the name of a publicly traded firm and its most recent 10-K filing. This year’s “target” for the competition was GameStop (NYSE: GME), a specialty video game retailer operating more than 6,000 stores worldwide. The basic question each team had to address was: “would you undertake a private equity buyout of the target?” The required output was a presentation – to be delivered in no more than 10 minutes before a judging panel of private equity professionals – laying out the full investment case, including industry analysis, key risks and potential returns.

Both teams sought to represent the best of LBS: a broad, but complementary, mix of backgrounds bringing rigorous analysis and keen insight to bear on the question. My team was comprised of an Italian investment banker (Matteo Masi), an American real estate private equity investor (Ryan Brewer), an Irish private equity associate (James O’Gara), an Italian management consultant (Matteo Luoni) and an American venture capital associate (me).

During the week of preparation, classes came and went, secondary to our primary focus: understanding everything there was to know about video game retailing, and GameStop in particular. Teams read critical industry reports, built financial projections, analyzed LBO returns, and contemplated the intricacies of the GameStop company charter to assess the buyout’s feasibility. After slightly less than 72 hours, we submitted a 45 page slide deck, with only seven minutes to spare until the submission deadline.

Proud of our work, but tired, we went home to rest for eight hours before heading to the airport in the morning. On the plane, we developed our presentation strategy, knowing we would need to rehearse for several hours in order to deliver the volume of content we wanted to cover in the allotted minutes. Upon arriving at the hotel, we rehearsed and rehearsed, ensuring we crisply delivered our investment thesis: that GameStop was attractively valued at the current price, but that industry headwinds and a dearth of tangible value creation alternatives made a take-private transaction unattractive.

The competition itself was structured in two stages, a first in which the eighteen participating teams were lumped into groups of six, out of which one would be chosen to advance to the final. To avoid any judging bias, team names were removed from the presentation and teams did not announce where they came from until the end of the day. Each team presented their thesis before 2-3 judges, all of whom were active private equity investors. Following the ten minute presentation, the teams were subjected to ten minutes of in-depth Q&A, covering anything the judges were curious about. Our presentation went smoothly (we covered all the content) and we felt we had answered questions well. With that under our belts, we headed into lunch.

Over lunch, the finalists were announced and my team was delighted to be chosen for the final. We would present before all the judges and all the other teams that had not advanced. We also faced an extended Q&A session to ensure in-depth questioning. By this time, our presentation was effectively memorized – the real wildcard rested in the Q&A portion, where judges could pick on any minor detail they wanted. In the final, before about 75 observers, we delivered our thesis and answered questions as they came in volleys from the judges. We walked away feeling we had put on a strong presentation and settled in to watch the final team present, and then await the judges verdict.

The judges returned after approximately 30 minutes of nerve-racking deliberation, during which my team distracted itself by walking around the Wharton campus. They offered high level feedback and suggested teams consider creative options for companies like GameStop, which have real assets but face industry challenges [used “headwinds” above]. Eventually, they announced the winning order – LBS first, the home-team Wharton second and Berkeley third – and our team breathed a collective sigh of relief and delight that a week of hard work had been rewarded.

The announcement was followed by a drinks reception at a nearby brew house; teams were able to thank the judges and received some insightful feedback on the strengths and weaknesses in presentation. Overall, the judges and other teams were highly complimentary of the LBS delegation’s work – many in fact asked for a copy of the presentation by email! Suffice it to say, the teams were both proud of their work and the ability to serve as good ambassadors for LBS abroad.