By David DeFelice, MBA Class of 2015
The 9th annual ACG Cup is a competition for graduate students focused on the field of mergers and acquisitions, investment banking, financial advising, and private equity. ACG stands for The Association for Corporate Growth and is a global organization with over 14,000 members that is comprised of middle-market dealmakers and business leaders who invest in growth and build companies.
In order to qualify for the Cup, our team initially had to place first in a local competition among Smeal MBAs. We were given approximately two weeks to work on this first round case, which centered on evaluating a number of strategic alternatives for a company composed of media and apparel segments. Activist shareholders were pressuring the parent company to divest their apparel section and focus on media, while, at the same time, there was internal interest in making an offer for an outside apparel company. After numerous valuations and scenario analyses, our team ultimately recommended making an offer for the outside apparel company. Following valuable feedback from this round and a first place finish, our team took on the regional challenge in Philadelphia along with finalists from Wharton, Temple, Delaware, Drexel, LaSalle, and Villanova.
The final round took place a month later, and we were given new information about a series of events that had occurred since the first round case. We were also given a new angle to examine the case from, as we were now to take on the role of a private equity firm tasked with making a decision about whether to make an offer for the parent company. Our team recommended a leveraged buyout of the parent company, and provided information about price, the structure of the deal, expected returns, and exit opportunities for the private equity firm. We also evaluated the earlier strategic alternatives discussed in the first case based on the new information we received. Our presentation was well-received by the judges, who were impressed by the range of valuation methods used, our consideration of both quantitative and qualitative factors, and our sensitivity analyses that modeled returns under a range of scenarios. We received constructive feedback as well about areas of our presentation we could improve. At the end of the day, the judges announced the three finalist teams, which were Temple, Wharton, and our team.
The next week, we travelled back to Philadelphia for the award ceremony to hear which place we received. After a networking session and panel on exit options, the results were announced and we took home the 2nd prize award. Wharton received the top honor, and Temple was given 3rd. We were very happy with the results, as, unlike some of the other teams, no one on our team had any private equity experience. We learned a vast amount as a team in a short amount of time, and are incredibly grateful to the sponsor KPMG, the judges, our ACG coordinator Jen Simons, and Penn State’s MBA office for the support. A special thank-you goes out to our finance professor, Chris Muscarella, who provided guidance throughout the competition. We hope a team from Penn State returns for the 10th edition of the ACG Cup next year and exceeds the precedent set by our group this year!