Bike Helmets
Practice this intermediate merger & acquisition case interview question in the Private Equity sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
This case tests market sizing and valuation capabilities in a mature industry context. Candidates must balance quantitative analysis (calculating market size, determining acquisition price using comparables) with qualitative judgment about whether an investment meets the PE firm's return hurdle despite lower growth prospects. The case also introduces synergy considerations that reward candidates who think beyond standalone company value.
Clarifying Information
TARGET COMPANY:
- The company only sells its products in the U.S.
- The company currently has an estimated market share of 60% of helmets sold in the U.S.
- The company has had a string of ineffective CEOs
- The company’s helmets have an average price of $30
- Helmet prices are not expected to change in the future.
- If candidate asks about acquisition price, tell them they will get that information later
MARKET: 7. The market is mature with few new entrants 8. U.S. regulations require all riders under the age of 18 to wear a helmet
PE FIRM: 9. Holds companies for an average of 7 years 10. Has an return target of 10%/year 11. Also owns a bicycle manufacturer (possible synergies unknown)