Leveraged Buyout Case Study of Abercrombie & Fitch: An Evaluation of Abercrombie & Fitch’s Potential as a LBO Target, Seen from a Private Equity Funds Perspective

Abstrakt

The low interest rate environment in today’s market has fueled the amount of investments related to private equity, as general partners have developed their ability to identify good companies with large opportunities for value creation. In addition, PE funds have after the financial crisis, to a much larger extent, been applying a more strategy driven approach to create such value. A company representing such opportunity, is the once so popular American teen retailer Abercrombie and Fitch (A&F). The purpose of this thesis has thus been to evaluate A&F as a potential target, by applying the LBO model and determine if such buyout could result in an acceptable return from a PE firm’s perspective.After a thorough analysis of both A&F and its environment and through the implementation of different strategic initiatives, we have concluded that A&F, as a LBO target, would provide a satisfactory return, from a PE funds perspective, if the investment where to be exited within four to eight years.