2

Private equity rolling-up scenarios?

How should we create a framework for this case prompt?

Your client is a large private equity firm. It is looking into “rolling up” the tow-truck industry; that is, buying many small- and medium-sized firms and combining them to create one, larger firm. It wants your help in assessing industry attractiveness.

In terms of market, we need to look at market size/ growth trends, competitive landscape, and BtE, but how should we include customer analysis in this study such as key segments, what do they want, location etc?

Thanks.

How should we create a framework for this case prompt?

Your client is a large private equity firm. It is looking into “rolling up” the tow-truck industry; that is, buying many small- and medium-sized firms and combining them to create one, larger firm. It wants your help in assessing industry attractiveness.

In terms of market, we need to look at market size/ growth trends, competitive landscape, and BtE, but how should we include customer analysis in this study such as key segments, what do they want, location etc?

Thanks.

(edited)

2 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer

Hello,

I agree with others. I would add in the company (companies in this case) bucket:

  • Potential synergies: both positive (procurement, manufacturing, distribution, marketing, economies of scale and scope) and negative (cultural clash!).
  • Acquisition cost.

Regards.

Hello,

I agree with others. I would add in the company (companies in this case) bucket:

  • Potential synergies: both positive (procurement, manufacturing, distribution, marketing, economies of scale and scope) and negative (cultural clash!).
  • Acquisition cost.

Regards.

Book a coaching with Vlad

97% Recommendation Rate

388 Meetings

7,315 Q&A Upvotes

USD 299 / Coaching

Hi,

Short answer - yes you may need to cover everything.

In the PE case ask in the beginning what's the objective (exit multiples) and desired exit time. Also, ask what is the strategy of the PE firm (Expertise in some area, other companies in the portfolio to have synergies with)

Then make a structure:

Market

  • Size
  • Growth rates
  • Profitability
  • Segments
  • Distribution channels

Competition

  • Market shares of competitors and their segments (see the next point)
  • Concentration / fragmentation (Fragmented market with lots of small players is less mature and easier to enter from a scratch. Concentrated market is hard to enter but has potential acquisition targets)
  • Unit economics of the players (Margins, relative cost position)
  • Key capabilities of the players (e.g. suppliers, assets, IP, etc)

Company

  • Unit economics (Margins, costs) in current or target markets
  • Brand
  • Product mix
  • Key capabilities

Feasibility of exit:

  • Exit multiples
  • Exit time
  • Existence of buyers

Best!

Hi,

Short answer - yes you may need to cover everything.

In the PE case ask in the beginning what's the objective (exit multiples) and desired exit time. Also, ask what is the strategy of the PE firm (Expertise in some area, other companies in the portfolio to have synergies with)

Then make a structure:

Market

  • Size
  • Growth rates
  • Profitability
  • Segments
  • Distribution channels

Competition

  • Market shares of competitors and their segments (see the next point)
  • Concentration / fragmentation (Fragmented market with lots of small players is less mature and easier to enter from a scratch. Concentrated market is hard to enter but has potential acquisition targets)
  • Unit economics of the players (Margins, relative cost position)
  • Key capabilities of the players (e.g. suppliers, assets, IP, etc)

Company

  • Unit economics (Margins, costs) in current or target markets
  • Brand
  • Product mix
  • Key capabilities

Feasibility of exit:

  • Exit multiples
  • Exit time
  • Existence of buyers

Best!

Related BootCamp article(s)

Case Studies

The case study is the most important element of the case interview, which you'll have to nail in order to get into strategic consulting. Here you can learn the specific skills and concepts necessary to solve them.

Focusing on The Core: Mock Interviews

It is to practice as many cases as possible - both as interviewee and as interviewee. Here are a couple of guidelines to help you get started

Related case(s)

PE Portfolio Strategy

Solved 5.6k times
PE Portfolio Strategy We are a private equity firm operating primarily in the automotive industry. We would like you to figure out whether we should increase our portfolio in the sensor market or not. We would like you to do a profit/margin growth potential analysis and tell us how we can add value to this company given the other companies in our portfolio.
4.1 5 337
| Rating: (4.1 / 5.0)

We are a private equity firm operating primarily in the automotive industry. We would like you to figure out whether we should increase our portfolio in the sensor market or not. We would like you to do a profit/margin growth potential analysis and tell us how we can add value to this company given ... Open whole case

MBB Final Round Case - Smart Education

Solved 1.9k times
MBB Final Round Case - Smart Education Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvantaged areas. The client is considering starting operations for its services in the Chicago area. They hired us to understand if that makes sense. Due to the nonprofit regulation, SmartBridge should operate on its own in the market, without any partnership. How would you help our client?
4.7 5 69
| Rating: (4.7 / 5.0)

Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvant ... Open whole case

Chinese Chess - Airline Business During COVID-19

Solved 600+ times
Chinese Chess - Airline Business During COVID-19 Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April.  They've brought you in to first investigate what can be done immediatedly to prevent hemorrhaging cash and surive in the short-term. They are also looking to see how the current situation can be viewed as an opportunity, and what can be done to prepare for the future. 
4.3 5 15
| Rating: (4.3 / 5.0)

Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April. They've brought you in to first investigate what can be done immediatedly to prevent hemor ... Open whole case

YodaPhone

Solved 400+ times
YodaPhone Our client is Yoda's Phones, a national telecommunications company. They have embarked on a three-year, multi-million dollar digitization program. Unfortunately, two years into the program, they realize they are significantly behind schedule and over budget. You have been brought in to right the ship and ensure the digitization program is delivered as planned.
4.4 5 25
| Rating: (4.4 / 5.0)

Our client is Yoda's Phones, a national telecommunications company. They have embarked on a three-year, multi-million dollar digitization program. Unfortunately, two years into the program, they realize they are significantly behind schedule and over budget. You have been brought in to right the sh ... Open whole case

Hot Wheels

Solved 400+ times
Hot Wheels Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability.
4.4 5 14
| Rating: (4.4 / 5.0)

Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability. Open whole case