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Citrix Systems, Inc.: A Fight Worth Figh...

Loutskina, Elena, ...

Case

Citrix Systems, Inc.: A Fight Worth Fighting?

Loutskina, Elena; Shah, Jigar

F-2049 | Published July 18, 2023 | 24 pages Case

Collection: Darden School of Business

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In December 2021, Valiant Capital Partners (VCP) is in the middle of bidding for Citrix Systems, Inc. (Citrix), to take the company private via a leveraged buyout (LBO). The auction of the renowned desktop-as-a-service (DaaS) company had attracted a number of bidders. VCP's initial bid of $15 billion ($92 per share) had allowed the fund to move to the final bidding round. Now with broader access to the company and its management, VCP has to revise its bid. Mohan Bhargav and William Hill, both with VCP and working on the Citrix deal, learn that Vista Equity Partners (Vista) has partnered with Elliott Investment Management (Elliott) to enter the bidding. Elliott bidding was not a big surprise. This activist investor had a subsidiary private equity (PE) firm created specifically to pursue private investments in mature tech companies. Plus, by December 2021, Elliott had amassed more than 10% of Citrix shares. Joined by Vista, an established leader in the field of technology-focused PE investments, the pair made a formidable opponent. It didn't help that one of Vista's portfolio companies, TIBCO, was a perfect roll-up candidate to pair with Citrix. In this David-versus-Goliath situation, Bhargav and Hill needs to figure out how much higher they can push VCP's bid and what the chances are that the Vista–Elliott consortium could outbid VCP. The case offers an opportunity for students to (a) evaluate classic LBO structures, cash flows, incentives, returns, and risks; (b) introduce the related roll-up PE investing strategy and associated risk/return investment profiles; and (c) evaluate the role of leverage in LBOs' success.

- Understand the structure, value drivers, and risks of LBOs. - Assess the role and potency of leverage in generating LBO returns. - Facilitate a practical application of the LBO valuation process. - Analyze the nuances of entry and exit multiples in an LBO valuation.