High-End Fashion Boutique Chain

ProHub Comment

This is a reverse DCF valuation case where candidates must work backward from a target ROI (30%) to determine the acquisition price. The case tests financial modeling skills, understanding of profit growth mechanics, and ability to clearly structure and communicate a quantitative analysis. The key insight is recognizing that profits grow for two years at 10% annually before calculating what purchase price yields the target return.

Estimated Time 15 minutes
Difficulty Hard
Source PeterK
50 / 100
Your client, a PE firm, is considering the acquisition of a seven-store high-end fashion boutique chain located on the West Coast. The owner would like to retire. What purchasing price should your client offer to the owner to achieve a 30% ROI over a two-year period?

Clarifying Information

  1. Exhibit 1. Financial Performance of Boutiques, 2021
  2. We’re in early 2022
  3. We expect a 10% annual growth in revenue while maintaining the same profit margin