Question 1

Question 1
• List the pros and cons of investing in Party City and
rank them in order of priority
Question 2
• Should Berkshire Partners make an investment in
Party City? Provide the rationale behind your
answer.
Question 3
• If Berkshire decided to bid for Party City, it needed
to consider potential conflicts with Amscan’s other
party supplier customers:
How can Berkshire mitigate that potential conflict?
Question 4
• With no remaining capital in Fund V, an investment in
Party City would need to be funded by Berkshire
Fund VI, presenting a potential conflict of interest:
How can Berkshire mitigate that potential conflict of
interest?
Question 5
• As of Mach 2005, how has the Amscan deal
performed for Berkshire Partners?
Question 6
• If Berkshire Partners decides to pursue the merger
between Amscan and Party City, should Amscan’s
performance since its acquisition be factored into
the structure of the transaction? In what way?
Question 7
• Given Party City is a publicly traded company at the
time of the deal and is being sold through a formal
process, assessing the fair value of new equity in
Party City is easier than Amscan. Compute the
Enterprise Value (show your calculation) using
information in the case Exhibits. Considering there
are not may buyers for Party City and the company
is in distress, what is an appropriate share price?
Provide the rationale behind your answer.
Question 8
• Using the Enterprise Value computed above, to
determine the equity contribution from Berkshire
Fund VI, students need to consider how much debt
would be used to acquire Party City. What is your
team’s multiple of EBITDA for the debt portion of
the transaction? Provide the rationale behind your
multiple.
Question 9
• Based on the above, how should Berkshire structure
the investment?
Question 10
• Provide a transaction structure (like Ex. 10) for the
acquisition of Party City, including post-transaction
ownership percentages (see Note 2 below) for
Fund V and Fund VI
Notes:
• Case Exhibits 7 & 8 contain EBITDA, Net Debt and
number of Party City shares outstanding
• Case states Fund VI and Weston Presidio would split
the equity for Party City, two-thirds and one-third
respectively