IoT and Flexible Loans
Practice this intermediate merger & acquisition case interview question in the Financial Services sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
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
27 minutes
Difficulty
Medium
Source
IESE
10
/ 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
- What is the objective? What does attractive means? → To acquire more clients and improve profitability of the bank.
- Why is IB interested in this acquisition? → To diversify its product offering and add new solutions to its clients.
- Where is the bank located and/or where does it operate? → United States.