Project Foxglove — Controlling-Shareholder Squeeze-Out
A 2-hour Controlling-Shareholder Squeeze-Out case study with a complete model answer
Modeled After
Lazard
Special committee book for a controlling shareholder's minority buy-in: an offer-price by exchange-ratio consideration-mix grid, blended-premium-to-all-shareholders analysis, a price-reaction-with-leaks precedent study, and six separate DCFs across cases and horizons
Structure and exhibit set are modeled after Lazard. The company, the financials and every figure in this case are entirely our own.
The Situation
Foxglove Data Systems, Inc. (NASDAQ: FXGL) sells data-infrastructure and observability software to enterprise engineering organizations on annual subscription.
Foxglove Data Systems, Inc.
- Sector
- Enterprise software — data-infrastructure and observability tooling sold on annual subscription to engineering organizations, billed annually in advance
- Size
- Geography
- United States, with the great majority of revenue billed in dollars and a subscription base concentrated in North American enterprise engineering organizations
- Ownership
- Situation
The Prompt
You are the financial advisor to the Special Committee of the Board of Directors of Foxglove Data Systems, Inc.
Supporting Materials
What you are handed at the start of the case, in the format a real process would use.
What You Have to Produce
The deliverables, in the order the committee will read them. The exercise runs 120 minutes.
PART 1
Unlevered free cash flow, on one set of conventions, in all three cases
PART 2
The beta triangulation, and which observation you are entitled to use
PART 3
Six discounted cash flows — three cases at two horizons
PART 4
The consideration-mix grid
PART 5
What the stock leg actually is
PART 6
Premium — to the class, and to the company
PART 7
The precedent study, struck both ways
PART 8
The trading comparison, and where the subject itself sits
PART 9
The procedural protections, and the standard of review
PART 10
The negotiating range, and the recommendation
How to Approach It
The order a strong candidate works in, and why. This is the shape of the answer — the finished answer deck and Excel model are in the solution set below.
- 01
Decide who your client is before you value anything
- 02
Choose the unaffected date early, and write the reason down
- 03
Build one cash flow engine and run all three cases through it
- 04
Triangulate the beta before you touch the discount rate
- 05
Run both horizons and let them argue with each other
- 06
Print the premium twice, on the same rows
- 07
Size the stock leg rather than describing it
- 08
Turn the precedents into a price in more than one way
- 09
Deal with the governance before you deal with the price
- 10
Derive the range, then say the uncomfortable thing
Key Concepts
The ideas this case is built on. Know these cold and the case becomes a question of execution rather than knowledge.
Controlling-shareholder squeeze-out
A transaction in which a stockholder who already controls a company acquires the shares it does not own. It is not an ordinary arm's-length acquisition and almost nothing carries over from one. There is no auction and usually no market check, because the controller can refuse to sell and can vote down any alternative. There is no combination, so there is no accretion or dilution to compute. And the fairness question is asked about a CLASS — the unaffiliated holders — rather than about stockholders generally, because the controller is on both sides of the table and its interests and theirs are not aligned on price.
Special committee
A committee of independent directors formed to negotiate on behalf of the company against a conflicted counterparty, with its own legal and financial advisors and, critically, the power to say no. Its independence is a matter of substance rather than form: a committee that cannot decline, cannot retain its own advisors, or is presented with a transaction already negotiated is not performing the function the name implies. The committee's leverage in a controller transaction is unusual in that it is almost entirely negative — it cannot run a process, so its only real instrument is the power to say no and the credibility of that no.
Majority-of-the-minority condition
A non-waivable condition that the transaction be approved by holders of a majority of the shares not owned by the controller or its affiliates. It is the second of the two protections that matter in a controller transaction, and it does something the committee cannot do alone: it puts the decision to the people whose money is at stake. Whether it is offered, whether it is waivable, and whether it was in place from the outset or conceded at the end all bear on how much weight it actually carries.
Blended premium versus class premium
The most consequential presentation choice in a controller buy-in. The class premium is the price paid divided by the reference price: what a minority holder receives. The blended premium carries the controller's unpurchased shares at the reference price and asks what the transaction costs relative to the whole company. The two figures can differ by a factor of several, and they are both true. Printing only the class premium makes a controller look generous; printing only the blended premium makes it look derisory. Printing both, with the aggregate consideration beside them, describes what is actually happening.
Contested unaffected date
The reference price for a premium is meant to be the last price unaffected by the transaction. When a controller's intent leaks before its formal proposal, there are two candidates — the day before the leak and the day before the proposal — and they can produce very different premiums on identical terms. Choosing between them is a judgment about what the market actually reacted to, and the honest way to make it is with evidence: what the stock did on the day the story ran, and what comparable situations did. Whichever date is chosen, the other belongs on the page as well.
Price reaction with leaks precedent study
A precedent set assembled around a feature of the process rather than a feature of the industry: controller buy-ins in which intent became public before the formal proposal. That narrowness is the point, because the only thing such a set is evidence about is the question the leak created. A study of that kind should be struck to both candidate dates rather than one, and should carry the bump from first proposal to last as well as the final premium — the bump is what tells a committee how much room controllers usually turn out to have.
Consideration-mix grid
A two-dimensional exhibit with offer price on one axis and exchange ratio on the other, whose cells show what the mix is made of at each combination. It exists because in a cash-and-stock proposal the headline number and the composition are separable, and a committee negotiating one without the other is negotiating half the deal. A second panel on the same axes, showing stock as a share of the consideration, makes the trade-off legible: raising the price at a constant ratio raises only the cash, and raising the ratio hands the minority more of an asset it does not control.
Predicted versus historical beta
A predicted beta is built from a company's fundamental exposures through a risk model; a historical beta is regressed on its own past returns. They diverge for readable reasons, and in a controlled company with a small float and a live proposal on the table there are two of them at once: a thin float makes the regression measure liquidity as much as risk, and a post-announcement window makes it measure the odds of a deal rather than the business. Triangulating against a peer-derived beta — unlevering each comparable at its own leverage and relevering the median at the subject's target — is how you check that discarding the history has not chosen the answer.
Multi-case, multi-horizon discounted cash flow
Running the same discounting engine over several forecast cases and several explicit horizons, and presenting all of the results rather than the average. It is worth the extra work when the case that governs is contested — as it is when the counterparty has furnished one of them — and when the answer is sensitive to how much of the value sits in a terminal multiple. The discipline it imposes is that the terminal range cannot be the same at every horizon: a longer explicit forecast has already captured growth that a shorter one is asking the exit multiple to carry.
Negotiating range construction
The translation of a valuation into instructions. A reservation price is the level below which the committee will not recommend a transaction and it should come from a specific case at a specific horizon, chosen for a stated reason. An opening counter should be defensible from the same model rather than pitched. A landing zone should come from evidence about how these negotiations usually move rather than from splitting the difference. Every number should point at a cell, because the first thing a controller's advisor will do is ask where each one came from.
What Makes It Hard
The specific traps in this case — the places candidates lose the assessment without noticing.
Check Your Answer
Type the figures you produced and find out how many are right before you open the worked answer. You get a verdict and, where you are off, a pointer to the part of the build to re-check — never the number itself. Everything you type stays on this device.
How to type a figure. Digits, with an optional unit: 1,234.5, $1,234.5, 2.6x, 21.4%. For a negative use (20.0) or -20.0. Enter as many decimals as you carried — precision is never penalised.
What the Case Asked For
The arithmetic is only half of it. Tick off what you actually produced — this half is yours to score, because nothing can grade a written recommendation from a checkbox.
The Model Answer
The worked answer in full: answer deck and Excel model, built the way a banker would actually build them. It is a reference, not a submission — a strong answer under the clock is far shorter.
What the Solution Covers
- —Consideration-mix grid
- —Blended premium versus class-specific premium
- —Price reaction with leaks precedent study
- —Multi-case DCF construction
- —Predicted versus historical beta triangulation
- —Negotiating range construction
Answer Deck
Full model answer, banker-formatted
Upgrade to Diamond
Sign up and upgrade to Diamond to unlock the answer deck, the Excel model and the audio walkthrough.
Get StartedThe Excel Model
The model is linked and tied out end to end — every schedule, every formula and every check, in the file itself.
Downloads are available to Diamond members
Excel Model and PowerPoint Deck and Answer Deck (PDF) — yours to open, edit and rebuild
Walkthrough
A conversational walkthrough of how to approach the case under time pressure — where to start, what to cut, and how the recommendation gets defended.
Audio Walkthrough
How to approach Project Foxglove — Controlling-Shareholder Squeeze-Out
60-second preview — upgrade to Diamond for the full walkthrough
Frequently Asked Questions
What is a controlling-shareholder squeeze-out case study in an investment banking interview?
It is a special committee exercise rather than a deal exercise. A stockholder who already controls a listed company proposes to buy in the shares it does not own, and the committee of independent directors asks its advisor whether the price is fair to the unaffiliated holders and what it should do next. What is graded is whether the candidate reasons about the structure it actually has: that there is no auction and cannot be one, that the controller's own shares are not being purchased so a single premium figure misdescribes the transaction, that the procedural protections bear on the answer as much as the arithmetic does, and that the recommendation names its own counter-argument. It is one of the few M&A exercises where getting the frame right is worth more than getting any individual number right.
Why is a controller buy-in not just an acquisition with a smaller target?
Because almost every mechanism an acquisition analysis relies on is absent. There is no auction and no market check, since the controller can decline to sell and can vote down any alternative, so the price discovery an ordinary sale process provides simply does not exist. There is no combination, so there is no pro forma earnings per share and no accretion to compute. Synergies that only the controller can realize are outside the frame, because the minority is not entitled to be paid for value only the buyer can create. And the fairness question is asked about a class rather than about holders generally, because the controller sits on both sides. A book that imports the acquisition kit has answered a question that was not asked.
What is the difference between the blended premium and the premium to the minority?
The premium to the minority, or class premium, is the offer price over the reference price — what a holder of the shares being bought actually receives. The blended premium asks what the transaction costs relative to the whole company, carrying the controller's unpurchased shares at the reference price because they are not changing hands. When the controller already owns most of the company the two differ by a large multiple, and both are true. A committee book that prints only the first has told the reader what a holder gets and nothing about what the buyer is paying for the asset it ends up owning; one that prints only the second reads as though the minority is being offered very little. Printing both, with the aggregate consideration beside them, is the only presentation that describes the transaction.
How do you decide which date is the unaffected date when intent leaks first?
With evidence rather than preference. The unaffected price is meant to be the last price that does not reflect the transaction, so the question is factual: did the market react to the leak? Look at what the stock did on the day the story ran and whether it gave the move back. Then look at whether comparable situations behaved the same way — a precedent set of controller buy-ins in which intent leaked is exactly the right evidence, and it should be struck to both dates so the comparison is like for like. Whichever date you conclude governs, carry the other measure on the page as well: a committee that only ever sees the figure that supports one side has been handed an argument, not an analysis.
What are the two procedural protections and why does it matter when they are put in place?
The first is a properly empowered committee of independent directors with its own legal and financial advisors and the authority to say no. The second is a non-waivable condition that a majority of the shares not owned by the controller approve the transaction. Together, and in place from the outset, they change the standard a court would apply to the transaction, because between them they replicate the two things an arm's-length deal has that a controller deal does not: an independent negotiator and an uncoerced vote. Timing matters because a condition conceded at the end of a negotiation, in exchange for price, has effectively been paid for by the minority — the committee has bought a protection it should have had from the start, using money that would otherwise have been in the price.
Why run six discounted cash flows instead of one with a sensitivity grid?
Because the disagreements here are structural rather than parametric. Three different documents make three different claims about the future — management's plan, published consensus, and the controller's own sensitivity — and a sensitivity grid on one of them cannot express that. The two horizons are there for a different reason: on a growing subscription business a five-year forecast leaves most of the value in a terminal multiple, and running an eight-year forecast alongside it shows how much of the answer depends on that multiple rather than on the cash flows. If the two horizons agree, the answer rests on firmer ground than either alone; if they do not, you have learned where the fragility is. What you must not do is carry the same exit range at both horizons, because the longer forecast has already captured growth the shorter one is asking the multiple to carry.
How should you allocate 120 minutes across a controller squeeze-out case?
Front-load the two decisions everything else depends on. A working budget: about 20 minutes reading, deciding which unaffected date governs, and screening the raw extract before you type anything; about 20 minutes building one cash flow engine and running all three cases through it, and settling the beta; about 30 minutes on the six discounted cash flows and the reference range; about 20 minutes on the consideration grids, the stock leg and the premium table; about 15 minutes on the precedent study struck both ways; and about 15 minutes on the negotiating range, the governance page and the recommendation. The template leaves 919 cells empty across 218 distinct formulas — roughly four cells per formula, because a grid and a three-corner block are each one formula filled out. Both numbers are printed on the template's cover so neither can hide.
What does a special committee's advisor do when there is no market check available?
It says so, early and in the text, and then does the only two things left. The first is to establish an independent view of value that does not depend on anyone bidding — which is why the discounted cash flow work carries more weight here than it would in a sale process, and why the beta and the case selection get more scrutiny than usual. The second is to build the committee's leverage out of what it actually has: a credible no, the procedural protection it can demand, and evidence about how these negotiations have historically moved. What it must not do is manufacture the appearance of a process. There is no auction to run, and pretending otherwise in the book would be worse than admitting the constraint.
About This Controlling-Shareholder Squeeze-Out Case Study
Controlling-Shareholder Squeeze-Out case study for investment banking interviews. 120-minute format covering consideration-mix grid, blended premium versus class-specific premium, price reaction with leaks precedent study. Includes the full prompt, a model answer deck, a tied-out Excel model and an audio walkthrough.
This case study sits in Investment Banking, under Mergers & Acquisitions. Every case ships with the full prompt, the supporting materials, a complete model answer and an audio walkthrough of the judgment behind the recommendation.
120-Minute Format
The time limit a real assessment would give you
Answer Deck
Included in the model answer
Excel Model
Included in the model answer
Audio Walkthrough
How to approach the case under time pressure
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