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Medium Merger & Acquisition

Entertainment Co.

#Media & Entertainment
ProHub Comment

This is a multi-layered M&A case requiring candidates to analyze financial projections, assess operational improvements, and make a strategic investment recommendation. The case tests skills in revenue/EBITDA calculations, financial modeling over a 5-year horizon, and business judgment around operational synergies and regulatory risk.

Estimated Time 27 minutes
Difficulty Medium
Source Darden
20 / 100
EntertainmentCo is the world’s largest live entertainment company, with two distinct business divisions—a ticketing division and a venue management division. Due to an anticipated crackdown from federal regulators, EntertainmentCo is planning a spin-off of its ticketing division. Your client is a PE firm that is interested in investing in the spin-off. Should they do it?

Clarifying Information

  1. What are the goals of the PE firm? / What do we know about the PE firm? The firm targets EBITDA and revenue increases of 50% from the initial investment in year 1 to year 5, which is when the firm would typically exit the investment. The firm specializes in the telecommunications, media and entertainment industries. The firm is willing invest a total of $175M to improve the operations of the spin-off.
  2. What is the ticketing business doing? The ticketing division manages ticket marketing, pricing, sales, and distribution through an online platform, as well as platforms for phone and physical box offices sales. They manage inventory, provide customer support, and ensure ticket validity.
  3. What is the venue management doing? The venue management division focuses on promoting and producing live events, such as concerts, theater shows, and sports events. As the world’s largest live entertainment company, they are responsible for organizing and promoting events for a wide range of artists, performers, and teams.
  4. Why are the regulators cracking down on EntertainmentCo? Increased scrutiny in the press and entertainment media has led to antitrust concerns. All events organized through the venue management division must be sold through their proprietary ticketing platform, weakening competition.
Mock Interview
Interviewer

EntertainmentCo is the world's largest live entertainment company, with two distinct business divisions—a ticketing division and a venue management division. Due to an anticipated crackdown from federal regulators, EntertainmentCo is planning a spin-off of its ticketing division. Your client is a PE firm that is interested in investing in the spin-off. Should they do it?

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...
Score coming soon
Practice this case with AI Mock Interview

A PE firm evaluates whether to invest $175M in acquiring the ticketing division of EntertainmentCo after a planned spin-off. The candidate must determine if the business can achieve the firm’s 50% revenue and EBITDA growth targets over 5 years through operational improvements, while considering regulatory and competitive risks.

Key Insights:

  1. Understand the business model separation: ticketing platform vs. venue management and how decoupling creates both opportunity and risk
  2. Financial projections must bridge current state ($500M revenue, $240M EBITDA in 2024) to 5-year targets ($750M revenue, $360M EBITDA) through identified operational efficiencies
  3. Regulatory context drives the opportunity—antitrust concerns motivate the spin-off but also represent a competitive risk if competitors enter the independent ticketing market
  4. Operational improvements (inventory optimization, data management, automation, new partnerships) are critical to meeting growth targets on a standalone basis