Nook Co.
Practice this intermediate merger & acquisition case interview question from Bain in the Retail sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
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.
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
- 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
- Geography: Nook Co. operates 10 islands across East Asia, with 5 additional islands in the construction pipeline. But they serve customers internationally
- Timeline: Fun Venture is looking to make the decision as soon as possible
- ROI Target: And is targeting a 15% ROI
- Competitive Landscape: Four other global competitors, details to be given later
- World population is 8 Billion
- Top 0.05% of world population has annual income of 100K+
- Assume target customers visit once every 2 years
- 2 Guests/Room
- Room rate is estimated to be $10,000 per night, all inclusive (food, service, outdoor activities, etc.)
- Nook Co.’s price per stay: $10,000/night, avg stay is 5 nights
- Across all islands, Nook Co. hires 1,000 service staffs, and 500 kitchen staffs
- Discount rate = 5%
- Assume Fun Ventures will hold Nook Co. forever, ideally