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Bain Medium M&A Valuation Market Sizing Profitability & ROI

Nook Co.

#Hospitality #PE #Vacation Destinations
ProHub Comment

This is a comprehensive PE acquisition case requiring candidates to build a market sizing framework, calculate company profitability and ROI, and assess deal viability against client targets. The case tests quantitative rigor, competitive benchmarking, and risk identification to support a clear M&A recommendation.

Estimated Time 15 minutes
Difficulty Medium
Source NYU
50 / 100

Your client Fun Ventures, an established PE firm, is looking to acquire Nook Co., a hospitality group that specializes in developing and transforming uninhabited islands into premium and private vacation destinations.

Nook Co. proposed an initial offer of $1.5 Billion. Fun Ventures would like your advice on whether they should proceed with the acquisition. What would you like to consider?

Clarifying Information

  1. Nook Co. Business Model: Nook Co. acquire ownerships of islands, construction resorts, and operate all on island activities and the transportation to and from the islands
  2. Geography: Nook Co. operates 10 islands across East Asia, with 5 additional islands in the construction pipeline. But they serve customers internationally
  3. Timeline: Fun Venture is looking to make the decision as soon as possible
  4. ROI Target: And is targeting a 15% ROI
  5. Competitive Landscape: Four other global competitors, details to be given later
  6. World population is 8 Billion
  7. Top 0.05% of world population has annual income of 100K+
  8. Assume target customers visit once every 2 years
  9. 2 Guests/Room
  10. Room rate is estimated to be $10,000 per night, all inclusive (food, service, outdoor activities, etc.)
  11. Nook Co.’s price per stay: $10,000/night, avg stay is 5 nights
  12. Across all islands, Nook Co. hires 1,000 service staffs, and 500 kitchen staffs
  13. Discount rate = 5%
  14. Assume Fun Ventures will hold Nook Co. forever, ideally