KKR—The Dollar General Buyout
Dean B. Nelson, a prominent KKR consultant, just had a meeting with the board of Dollar General about KKR’s intention of taking Dollar General private. From the meeting, Nelson sensed that Dollar General was very receptive of the deal, particularly on the terms that he proposed. Nelson was excited about this potentially lucrative LBO deal, and could not wait to present it to KKR’s management team. He believed that if he put together an impressive proposal, he was very likely to get a green light. He just needed to come out with convincing arguments as to why Dollar General would be a great addition to KKR’s portfolio, to identify the key drivers for value creation, and to make sure Dollar General was a good buy under the proposed terms, and KKR would potentially reap handsome profits from it.
This case can be used in the core finance course, private equity course, or mergers and acquisitions course, undergraduate or graduate, as a platform case for deal structure and valuation. It can also be used to introduce the leveraged buyout (LBO) industry and to familiarize students with different valuation techniques.