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Medium M&A

Athletic Athleisure

#Consumer & Retail
ProHub Comment

This M&A case requires candidates to evaluate a strategic acquisition by analyzing market attractiveness, financial viability through EBITDA calculations and valuation multiples, and synergy potential. The case tests ability to work with incomplete information, build financial models from market data, and balance growth opportunities against execution risks and integration challenges.

Estimated Time 15 minutes
Difficulty Medium
Source Duke
50 / 100
Athletic Athleisure (AA) is a boutique, high-end athletic apparel brand that is considering acquiring Vinyasapp, an app-based yoga and Pilates platform. The app has been performing very well over the past two years, so the management team at Vinyasapp is willing to sell for $50M. Should Athletic Athleisure purchase this company?

Clarifying Information

  1. Client/Company information: AA has strong brand recognition and enjoys a positive reputation in its industry.
  2. Industry/Competition information: The wellness industry has grown exponentially in recent years, as individuals have become more concerned about their health and are exploring more convenient ways to exercise.
  3. Product information: AA’s customers are very loyal to its brand and its main customers are individuals who practice yoga and Pilates regularly. Their products include compression and moisture-wicking workout attire and accessories. Their customers are generally technologically savvy and would be interested in taking virtual workout classes.
  4. Value Chain/Revenue information: In recent quarters, AA has experienced a decline in profitability due to supply chain constraints and an increase in fixed operating costs from keeping large stores open. They are considering closing down some of their brick-and-mortar locations in favor of selling more of their products online.
  5. Any constraints on the case: AA’s CEO wants to reverse the trend in profitability and hopes to add $8M in annual EBITDA over the next 3 years