Entrepreneurial Finance and Private Equity

Class #13 – Tuesday, November 26, 2002

Mezzanine Financing

 

Case:    BCI GROWTH III – May 1993 (9-298-093)

 

Network File:   BCI.xls

 

  1. How do the Casella brothers propose to create value in a mature industry such as waste haulage and disposal?  What are the key risks associated with their roll-up strategy?

 

  1. To what extent to the financial projections provided by Casella and Bohlig help Remey assess the risks and rewards of the transaction:  What are their key limitations?

 

  1. Remey worries that this transaction will offer mezzanine returns for venture capital-type risks.  Are these concerns reasonable?  Should BCI undertake the Casella investment?

 

  1. BCI Advisors has sought to differentiate itself by specializing in “mezzanine” private equity investments.  What are the key strengths and weaknesses of their strategy?  Is their strategy likely to be sustainable in view of the growth of the private equity industry?