Case Notes/Answers
HONY, CIFA, AND ZOOMLION CREATING VALUE AND
STRATEGIC CHOICES IN A DYNAMIC MARKET by Josh
Lerner Yiwen Jin
Discussion Questions:
1. To study the structuring of cross-border leveraged buyout transactions.
2. To examine the challenges associated with the translation of the private equity model in
emerging markets.
3. To illustrate the development of competitive strategies by private equity organizations.
, 5-812-068
NOVEMBER 9, 2011
T E AC H I N G N O T E
Hony, CIFA, and Zoomlion: Creating Value and
Strategic Choices in a Dynamic Market
Synopsis
The partners of Hony Capital, a leading Chinese-based fund, are considering whether to invest
alongside one of their portfolio companies, Zoomlion, in the acquisition of a large Italian competitor.
Both the timing and the nature of the proposed investment pose substantial challenges for Hony.
Pedagogical Objectives
1. To study the structuring of cross-border leveraged buyout transactions.
2. To examine the challenges associated with the translation of the private equity model in
emerging markets.
3. To illustrate the development of competitive strategies by private equity organizations.
Areas for Student Analysis
The Initial Transaction
The instructor can begin by asking the students whether the original 2006 investment in
Zoomlion made sense. It may be useful to highlight the key points in the timeline of the firm,
including the formation of Zoomlion in 1992, the initial meeting between John Zhao and Chairman
Zhan in 2003, the initial investment in 2006, and the proposed CIFA deal in 2008.
On the plus side, the company at this point has many inefficiencies that can be addressed. If a
primary goal of private equity investing is to create value by improving operations, Zoomlion seems
like a promising target. Zoomlion has been owned by the state, which means that a cadre of party
officials largely shaped its organization and trajectory. It is not hard to imagine that even basic
HONY, CIFA, AND ZOOMLION CREATING VALUE AND
STRATEGIC CHOICES IN A DYNAMIC MARKET by Josh
Lerner Yiwen Jin
Discussion Questions:
1. To study the structuring of cross-border leveraged buyout transactions.
2. To examine the challenges associated with the translation of the private equity model in
emerging markets.
3. To illustrate the development of competitive strategies by private equity organizations.
, 5-812-068
NOVEMBER 9, 2011
T E AC H I N G N O T E
Hony, CIFA, and Zoomlion: Creating Value and
Strategic Choices in a Dynamic Market
Synopsis
The partners of Hony Capital, a leading Chinese-based fund, are considering whether to invest
alongside one of their portfolio companies, Zoomlion, in the acquisition of a large Italian competitor.
Both the timing and the nature of the proposed investment pose substantial challenges for Hony.
Pedagogical Objectives
1. To study the structuring of cross-border leveraged buyout transactions.
2. To examine the challenges associated with the translation of the private equity model in
emerging markets.
3. To illustrate the development of competitive strategies by private equity organizations.
Areas for Student Analysis
The Initial Transaction
The instructor can begin by asking the students whether the original 2006 investment in
Zoomlion made sense. It may be useful to highlight the key points in the timeline of the firm,
including the formation of Zoomlion in 1992, the initial meeting between John Zhao and Chairman
Zhan in 2003, the initial investment in 2006, and the proposed CIFA deal in 2008.
On the plus side, the company at this point has many inefficiencies that can be addressed. If a
primary goal of private equity investing is to create value by improving operations, Zoomlion seems
like a promising target. Zoomlion has been owned by the state, which means that a cadre of party
officials largely shaped its organization and trajectory. It is not hard to imagine that even basic
