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Medium M&A Product Innovation Financial Strategy Product Development Financial Analysis

IoT and Flexible Loans

#Financial Services #Banking #Manufacturing #IoT/Technology
ProHub Comment

This case combines M&A evaluation with product innovation and financial analysis. The candidate must assess whether acquiring IoTech creates genuine strategic value through flexible loan offerings while identifying implementation risks. The quantitative analysis reveals that flexible loans are particularly valuable for seasonal businesses like ToyGame, allowing payment alignment with cash flow patterns.

Estimated Time 15 minutes
Difficulty Medium
Source IESE
50 / 100
Industrial Bank (IB) is a leading financial institution providing loans to manufacturing companies to finance machinery and Capex-intensive equipment. IB is considering to acquire IoTech, which installs IoT (Internet of Things) devices in production machines and leverages their usage data for various uses. IB believes that having this production data will be useful to launch a new product: flexible loans in which clients repay the loan instalments in a per-use basis (this means, as they produce), instead of as in a standard fixed-payment loan. This could be attractive for seasonal businesses, for instance. IB’s president would like you to evaluate if the value proposition of the new flexible loans after acquiring IoTech would be attractive for the bank.

Clarifying Information

  1. What is the objective? What does attractive means? → To acquire more clients and improve profitability of the bank.
  2. Why is IB interested in this acquisition? → To diversify its product offering and add new solutions to its clients.
  3. Where is the bank located and/or where does it operate? → United States.