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Medium Profitability Merger & Acquisition Bidding Strategy

Parking & Co

#Real Estate #Transportation #Urban Infrastructure
ProHub Comment

This case requires candidates to build a bottom-up financial model for a parking concession business. The key challenge is identifying the three main operational cost components (maintenance, salaries, software) and calculating the contribution margin to determine the maximum bid price that still achieves the 5-year payback target. The recommendation then applies strategic thinking about competitive positioning.

Estimated Time 26 minutes
Difficulty Medium
Source IESE
10 / 100
A tender to own the concession of a street in Madrid has recently opened and our client is interested on the bid. They have come to us to help them on the bid. The street is C/Jorge Juan located in the prestigious neighborhood of Barrio Salamanca. How much should the client bid for?

Clarifying Information

  1. Objective: to payback the investment within the next 5 years.
  2. The client owns the concession of other streets in Madrid and other Spanish cities.
  3. No financial constraint, the bid can be as high as we want.
  4. The concession lasts 8y.
Mock Interview
Interviewer

A tender to own the concession of a street in Madrid has recently opened and our client is interested on the bid. They have come to us to help them on the bid. The street is C/Jorge Juan located in the prestigious neighborhood of Barrio Salamanca. How much should the client bid for?

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...
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Practice this case with AI Mock Interview

A client seeks to bid for a parking concession on a Madrid street. The candidate must calculate annual revenues, operational costs, and determine the maximum price they can bid while achieving a 5-year payback period. The case teaches financial modeling, prioritization of key drivers, and competitive strategy.

Key Insights:

  1. Revenue calculation requires capacity analysis (400 cars) × parking duration (1h/day) × ticket price (€3) × weekly occupation rates (varying by day)
  2. Operational costs focus on three items: maintenance (€0.9M), salaries for 3 inspectors (€90k), and software (€10k), totaling €1M/year
  3. Contribution margin of €2M/year enables maximum bid of €9M for 5-year payback; recommendation suggests €10-11M to account for competition and synergies with existing portfolio
  4. Synergy opportunities include leveraging existing personnel and consolidating software costs across multiple parking locations