Lonestar Graphite

19 Pages Posted: 5 Apr 2010

See all articles by Robert S. Harris

Robert S. Harris

University of Virginia - Darden School of Business

Jason Gaede

University of Virginia - Darden School of Business


Lonestar Graphite is a potential purchase for a middle-market private equity firm. The private equity firm must decide what to offer for an equity position in Lonestar, based on both the underlying operations of the firm and the availability of other sources of funds (largely debt) to finance a transaction. Opportunities for analysis include application of a number of valuation techniques including variations of discounted cash flow models and multiples.



July 27, 2009


Steve Patterson smiled as he walked past Lonestar Graphite's (Lonestar) headquarters in Henderson, Texas, a small town about an hour's drive southwest of Dallas. The company was producing some of the most technologically advanced products in its industry and was being offered for sale by its parent United Oil Company of Texas (UNOTEX). Patterson and Ravi Desai were cofounding directors of Hamilton Capital Partners (HCP), a relatively new $ 450 million middle-market private equity firm. Patterson and Desai wondered whether Lonestar Graphite was a good addition to its growing portfolio of companies.

The final due diligence meeting between HCP and Lonestar's management team had just ended. It was a Friday, in late September 2000, and management was insistent that the meeting end by 5:00 p.m. On a fall Friday evening in Henderson, you would not find many businesses open, cars on the streets, or people in their homes. Everyone was under the lights at the Henderson High School stadium watching the Panthers play football. Lonestar was the largest employer in the town, and a majority of employees' families would insist they arrive at the game early.

Fortunately, Patterson had covered his remaining questions and concerns before the 5:00 p.m. deadline. But rather than head to the game, he drove back to the local hotel. He had come to Henderson to look at Lonestar—not football.

. . .

Keywords: valuation, private equity, levered acquisition, acquisition

Suggested Citation

Harris, Robert S. and Gaede, Jason, Lonestar Graphite. Darden Case No. UVA-F-1595, Available at SSRN: https://ssrn.com/abstract=1583745

Robert S. Harris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4823 (Phone)
434-924-4859 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/harris.htm

Jason Gaede

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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