Consulting interview case on Private Equity investment.

Private Equity
Letzte Aktivität am 7. Nov. 2018
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Anonym A fragte am 7. Nov. 2018

Hello all,

I was recently on an MBB first round which I did through Skype and was able to advance to the final round, coming in a couple days. I did not receive much feedback, but one of the case questions had me struggling a bit, since it did not have the typical structure/approach I have come to expect.

I was asked the following: Your client is a UK PE firm looking to acquire a Spanish shoe manufacturer. Give me five things you would like to know about the market and five things about the firm in order to assess this opportunity.

My trouble came with the 5 things, 5 things, and although I managed to provide some good analysys and insights I believe I was a bit unstructured. How would you suggest initially approaching such question. How would you structure it?

Thanks all!

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Benjamin
Experte
bearbeitete eine Antwort am 7. Nov. 2018
ex-Manager - Natural and challenging teacher - Taylor case solving, no framework

Hi

Basically its a due diligence. In term of structure its probably the easiest since its always more or less the same issues to tackles

1. Check market attractivness

2. Assess target performance and future potential

3. Challenge BP + exit opportunities

So to answer your question :

5 things to know about the market

1.What is the target market : type of shoes (men, woman, kids, sports, high end), etc. and geography (spain only, europe, worldwide)

2. What is the size of the target market

3. what is the trends (past and future) of the targetted segment

4. How is competition structured on the targgetted segment

5. What are the different distribution channels and how are sales distributed

5 things about the target

1. How are we performing economically

2. what is ou market share and are we winnning / losing field over competition

3. Are we positionned on the right segment (based on trend x size x distriubtion channels)

4. How are operations performing ?

5. Is the company well positionned for the future trends

Hope this helps

Best

Benjamin

(editiert)

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Vlad
Experte
antwortete am 7. Nov. 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

I would start with clarifying questions:

  1. Objective of the PE company (exit multiples, exit time)
  2. PE company strategy (synergies with existing portfolio, expertise)

Then I will look at the following:

Market

  • Size
  • Growth rates
  • Profitability
  • Segments and growth rates, our segment
  • Distribution channels

Competition

  • Market shares of competitors and their segments (see the next point)
  • Concentration / fragmentation
  • Unit economics of the players (Margins, relative cost position)
  • Key capabilities of the players (e.g. suppliers, assets, IP, etc)

Company

  • Revenues and growth rate
  • Profitability
  • Unit economics (Margins, costs) i
  • Brand
  • Product mix
  • Key capabilities
  • Management team

Feasibility of exit:

  • Achieving the objective (e.g. Exit multiples)
  • Exit time
  • Existence of buyers
  • Risks

Best

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Benjamin gab die beste Antwort

Benjamin

ex-Manager - Natural and challenging teacher - Taylor case solving, no framework
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