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Medium Merger & Acquisition

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 27 minutes
Difficulty Medium
Source Duke
10 / 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
Mock Interview
Interviewer

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?

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
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Practice this case with AI Mock Interview

Athletic Athleisure is considering acquiring Vinyasapp for $50M to enter the growing wellness app space and achieve its EBITDA growth targets. The analysis shows Vinyasapp generates $6M EBITDA at an 8.3x multiple, which is comparable to market transactions, but candidates must identify synergies and cost-cutting opportunities to achieve the $8M EBITDA target over 3 years while managing integration risks.

Key Insights:

  1. Market sizing and revenue calculation: Calculate Vinyasapp’s $50M revenue as 18% of $278M market (Exhibit #1)
  2. EBITDA calculation and valuation: Determine $6M EBITDA ($50M revenue - $44M operating expenses), apply 8x comparable multiple to arrive at $48M valuation
  3. Synergy identification and risk assessment: Balance opportunities (market entry, customer base overlap, business diversification) against challenges (lack of app expertise, limited operational overlap, customer acquisition costs)
  4. Strategic context: Position acquisition within AA’s need to reverse profitability decline and migrate from brick-and-mortar to digital channels