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Medium M&A Profitability Synergy Analysis

Eurotech

#Technology #Audio-Visual #Hardware Manufacturing
ProHub Comment

This is a comprehensive M&A synergy case requiring candidates to analyze a cross-border merger in a declining hardware industry. The case tests structured problem-solving around cost and revenue synergies, with emphasis on identifying that Poland's superior profitability profile (higher R&D investment, lower labor costs) should drive consolidation strategy. The quantitative analysis is moderate in complexity but requires careful ratio calculations.

Estimated Time 15 minutes
Difficulty Medium
Source IESE
50 / 100
Two technologic firms within the audio-visual tech industry have decided to join forces. Their market: manufacturing of Hardware components for audio-visual transmission has been declining at a 14% rate and this has affected their profitability jeopardizing their future operations. Both of their CEOs have agreed on contracting a consulting firm to help them navigate the process. Your job is to size the potential synergies that the operation may yield for the NewCo in the future

Clarifying Information

  1. If the interviewee asks to know more about the audio-visual industry, show exhibit I
  2. The companies work on a per project basis, mainly for hospitality segment (75% of their revenue)
  3. Their operations are limited to the manufacturing & assembly of the Hardware components, the installation is done by a third party
  4. The companies are not based in the same country, one company is in France and the other in Poland
  5. They are both of similar size and have similar operations
  6. The French company owns two plants (one in Southern France and the other next to Paris) while the Polish part owns one bigger plant near Warsaw
  7. The objective is to improve their common profitability by a 10% of the aggregated revenues