Strategy Simplified
S11E22: Bain M&A Case Solved by Duke Masters Candidate
Sep 15, 2023
An airline considers investing in an e-commerce company. The candidate delivers a strong investment recommendation. They discuss the benefits of a merger, analyze the market size, growth rates, and profitability of the e-marketplace software company. They explore the challenges of the airline industry and switching to a software system. The pros and cons of investing in a software company are examined, focusing on cost savings and innovation. Feedback on the candidate's recommendation is given, highlighting the bimodal nature of the topic and communication skills.
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Quick takeaways
- The candidate recommends proceeding with the investment due to significant cost savings and potential for innovation.
- Legal due diligence and exploring alternative funding options are crucial for mitigating risks.
Deep dives
Understanding the Investment Opportunity
The podcast episode discusses a case involving an airline considering a $100 million investment in a software company. The software is an e-marketplace that aims to improve the purchasing capabilities of airlines and reduce costs. The candidate must evaluate whether the investment is worth it. From a customer perspective, the potential cost savings make it an attractive opportunity, with an estimated $17.5 million saved annually. However, from an investment perspective, the net present value suggests a net negative return. Despite this, the candidate recommends going ahead with the investment, considering the substantial cost savings and potential for innovation.
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