Internos Global Investors: Acquisition of Commerz Real Spezialfonds

PAUL MILSTEIN CENTER FOR REAL ESTATE Launched in 2008, Internos Global Investors largely grew its portfolio by acquiring existing funds management businesses from companies that had decided to shed non-strategic, underperforming investment subsidiaries. In 2013 the Internos team considered the acquisition of the German bank Commerzbank's institutional real estate funds division (Commerz Real Spezialfonds or "CRS"). While the business appeared to have both scale and the promise of lucrative returns, the fund was heavily overstaffed—and German labor laws made it very difficult to dismiss employees. In past acquisitions, Internos had not shied away from loss-making businesses when it could identify synergies, cost-savings and use deal structure to shield it from risk. However, the CRS opportunity was on an entirely different scale from anything that Internos had undertaken during the previous five years. This case ask students to consider options to trimming CRS overhead—and if there could be other mechanisms to drive revenue. As part of the case analysis, students are tasked to prepare a financial model with pro forma financial projections and a recommended purchase price for CRS, as well as an income statement of CRS, both before and after a proposed Internos takeover.