Easy
Merger & Acquisition
Payments in Panama
Practice this beginner-friendly 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 is a structured M&A case requiring candidates to calculate target company revenues using market share data, identify cost synergies through detailed cost analysis, and make a GO/NO-GO recommendation with financial justification. The case tests analytical skills, ability to work backwards from market data, and structured problem-solving around acquisition economics.
Estimated Time
16 minutes
Difficulty
Easy
Source
Duke
20
/ 100
During your weekly game of pickleball with the CEO of Puerto Pay, a Puerto Rican payments processor, she mentions that she’s thinking of expanding her company’s footprint and has been looking to acquire Telepay, a competitor based in Panama. She knows of your stellar reputation as a consultant and asks for you to determine whether or not she should acquire Telepay.
Clarifying Information
Industry information:
- Telepay and Puerto Pay are both Payment Processing companies. Payments processors are technology companies that facilitate transactions between customers, merchants, and banks and collect fees for facilitating these transactions
Puerto Pay information:
- GOAL: Puerto Pay had profits of $625MM in 2020 and is looking to increase profit in 2021 post-acquisition to $645MM, including the cost of buying Telepay
- The CEO of Puerto Pay does not want to spend more than $500MM on acquiring Telepay
Telepay information:
- Telepay has over 85% of market share in Panama so you can consider them to have a monopoly on the payments processing space in Panama (that is, Telepay generates 100% of the revenues of the Payment Processing market in Panama.)
- Puerto Pay and Telepay have no overlapping customers.
Product information:
- Both Puerto Pay and Telepay have the same product: Point-of-Sale (POS) systems. POS systems allow merchants to charge customers for transactions made in-store (think of the Square/Clover/Toast machines when you buy coffee)