Candidates must evaluate whether a U.S. energy conglomerate should acquire EnerForce, a wind turbine manufacturer. Using market preference data, competitive rankings, and growth projections, they calculate addressable sales across three geographic markets, then perform a perpetuity-based DCF valuation to determine if the $700M asking price is justified versus the calculated $750M intrinsic value.
Key Insights:
- Market attractiveness varies by geography: U.S. market is most attractive due to high growth (9%), strong competitive positioning, and alignment with customer preferences; Asia offers volume but at unfavorable competitive positioning; Europe is declining (-13%)
- DCF with perpetuity assumption: Calculate annual profit as (units × price × margin) and divide by discount rate to determine valuation, requiring clear assumptions about market share and production capacity
- Competitive threats require consideration: Asian competitors with strong cost advantages could enter U.S./European markets, representing long-term risk to the acquisition thesis despite current favorable positioning