This is a classic M&A case that tests both quantitative analysis (synergy calculation, growth projections) and strategic thinking. The case requires the candidate to assess market attractiveness, identify synergies across revenue and cost dimensions, and ultimately make a recommendation. The light quantitative component focuses on calculating feasibility of doubling HD's per-store revenue through ~15% CAGR.
Our client is Linda’s Great Burgers (GB). GB is a worldwide fast food chain store. Linda’s uses the individual franchise model to sell burgers. The client feels the burger market is saturated and is exploring acquisitions for growth. To increase growth Great Burgers is thinking of acquiring Heavenly Donuts.
Heavenly Donuts (HD) is a young coffee/donut chain. It’s business model is a territorial franchise model (i.e. franchisers are granted specific regions to sell donuts). HD is a worldwide company.
Is HD a good acquisition and match for GB?
Data provided in Exhibit 1 includes: