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Hard Merger & Acquisition Market Sizing

Muni Golf Opportunity

#Real Estate #Private Equity
ProHub Comment

This case requires systematic market sizing to estimate golf course revenues by layering assumptions about pricing, capacity, and operating hours. The interviewee must then apply multiple valuation methods (DCF, comparable multiples based on land value) to triangulate whether the $40M valuation is attractive, while considering redevelopment optionality and competitive dynamics.

Estimated Time 37 minutes
Difficulty Hard
Source Duke
20 / 100
Our client, FSB Capital Holdings LLP is a real estate focused private equity firm, with experience in developing and operating properties over medium to long term time horizons. Recently, the FSB Capital deal origination team has been made aware that the City of San Diego in California is considering divesting one of its municipal golf properties, the Balboa Park Golf Course located near downtown San Diego. FSB Capital has engaged us to value the potential asset, evaluate potential growth strategies for the property if acquired, and provide a final recommendation regarding whether to pursue a deal with the City of San Diego.

Clarifying Information

  1. Client/Company information: FSB Capital has experience operating golf resorts, hotels, and developing commercial and limited residential real estate.
  2. Industry/Competition information: Nearby privately-held Riverwalk GC (27-hole course) is being redeveloped into a master-planned community of housing, offices, shops, and an 80-acre riverside park.
  3. Product information: Course consists of an 18-hole championship course, 9-hole executive course, driving range, pro-shop, and clubhouse bar/restaurant.
  4. Property is situated on the Southeast corner of the larger Balboa Park complex which contains the famed City Zoo, museums, and the Naval Medical Center. (think a corner of Central Park)
  5. Course is 5 minutes from downtown, Convention Center, hotels, historic nightlife district (Gaslamp)
  6. Residential communities border the course to the east and south.
  7. Value Chain/Revenue information: Golf revenue comes from golfers paying a greens fee for a round of golf. Typical round consists of 4 golfers. Patrons often buy food & alcohol on the course or after a round
  8. Any constraints on the case: N/A
Mock Interview
Interviewer

Our client, FSB Capital Holdings LLP is a real estate focused private equity firm, with experience in developing and operating properties over medium to long term time horizons. Recently, the FSB Capital deal origination team has been made aware that the City of San Diego in California is considering divesting one of its municipal golf properties, the Balboa Park Golf Course located near downtown San Diego. FSB Capital has engaged us to value the potential asset, evaluate potential growth strategies for the property if acquired, and provide a final recommendation regarding whether to pursue a deal with the City of San Diego.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
Score coming soon
Practice this case with AI Mock Interview

FSB Capital is evaluating the acquisition of a municipal golf course in downtown San Diego. The candidate must build a bottom-up revenue model for the golf operations, discount cash flows to determine business value, and compare against land value multiples to make a final recommendation on whether to pursue the acquisition.

Key Insights:

  1. Revenue modeling requires breaking down pricing (weekday/weekend, peak/off-peak, twilight rates) and capacity (tee times per hour, operating hours, weeks per year)
  2. Strong candidates recognize that the existing rate card is too complex and simplify by making reasonable assumptions about average greens fees and cart fees
  3. Land value in an urban core may significantly exceed operational business value, requiring analysis of redevelopment potential (hotel, residential, commercial)
  4. Multiple valuation approaches (DCF on operations, multiples on land value, comparables) should be triangulated to validate assumptions and determine deal attractiveness