Skip to main content
About HEC About HEC Faculty & Research Faculty & Research Master’s programs Master’s programs MBA Programs MBA Programs PhD Program PhD Program Executive Education Executive Education Summer School Summer School HEC Online HEC Online About HEC Overview Overview Who
We Are Who
We Are
Egalité des chances Egalité des chances Career
Center Career
Center
International International Campus
Life Campus
Life
Sustainability Sustainability Diversity
& Inclusion Diversity
& Inclusion
Stories Stories The HEC
Foundation The HEC
Foundation
Coronavirus Coronavirus
Faculty & Research Overview Overview Faculty Directory Faculty Directory Departments Departments Centers Centers Chairs Chairs Knowledge Knowledge Master’s programs Master in
Management Master in
Management
MSc International
Finance MSc International
Finance
Specialized
Masters Specialized
Masters
X-HEC
programs X-HEC
programs
Dual-Degree
programs Dual-Degree
programs
Visiting
students Visiting
students
Certificates Certificates Student
Life Student
Life
Student
Stories Student
Stories
MBA Programs MBA MBA Executive MBA Executive MBA TRIUM EMBA TRIUM EMBA PhD Program Overview Overview HEC Difference HEC Difference Program details Program details Research areas Research areas HEC Community HEC Community Placement Placement Job Market Job Market Admissions Admissions Financing Financing Executive Education Executive Masters Executive Masters Executive Certificates Executive Certificates Executive short programs Executive short programs Online Online Train your teams Train your teams Executive MBA Executive MBA Summer School Youth Programs Youth Programs Summer programs Summer programs HEC Online Overview Overview Degree Program Degree Program Executive certificates Executive certificates MOOCs MOOCs

Instant

Bain Capital’s ‘Take Private’ of China Fire

Finance
Published on:
Updated on:
August 23rd, 2021

Denis Gromb, Antin I.P. Chair Professor of Finance at HEC Paris, talks about his business case study “Bain Capital’s ‘Take Private’ of China Fire” co-authored with Marc Kitten of CANDESIC, and about case writing.

hands shake over money - ArenaCreative

©ArenaCreative on Adobe Stock

Company valuation

The case focuses on China Fire, a NASDAQ-listed Chinese company operating in the fire protection industry serving the Chinese steel and nuclear sectors. The company is being ‘taken private’ by its family owners and Bain Capital’s private equity arm. The case allows instructors to cover different methodologies for valuing a company: historical trading range, brokers’ price targets, trading multiples, transaction multiples, historical takeover premia and discounted cash flow analysis.

But other themes as well

The case’s core is focused on valuation methods, but it also touches upon less technical but equally interesting issues. For a start, why is a Chinese company, whose entire business is in China, listed on an American stock market? Why are US-listed Chinese firms currently under attack by US hedge funds? Why are they reacting with buyouts and why are US private equity firms willing to help?

Case studies

We wanted to write a case we could use in all types of programs: undergrads, MBAs, executives, etc. I like cases that put financial decisions in a broader business context. Here, for instance, the case covers valuation methods, but this is meaningful only if one understands that following governance-related scandals, US-listed Chinese firms are under attack. Is China Fire a collateral victim or was it previously overpriced?

I also like cases with ‘drawers’ that can be pulled out or not depending on discussion dynamics. With China Fire, I often go into short-selling by hedge funds. This is not central to the case but allows students to make connections with other courses. Context also invites students to share their own knowledge and experience, and they often have a lot! We also wrote a very short abridged version of the case that works well if participants have little preparation time or must prepare in class.

 

Edit of 01/29/2021: “Bain Capital’s ‘Take Private’ of China Fire” case is also on the Case Centre's 2020 best seller list.

Related content on Finance

Subscribe button for Knowledhe@HEC newsletter

Newsletter knowledge

A monthly brief in your email box and 3 issues of the book per year.

follow us

Insights @HECParis School of #Management

Follow Us

Support Research

Our articles are produced thanks to our reader's support