ST Boat Sale

ProHub Comment

This case teaches candidates to build a financial valuation model by working backwards from operational metrics (tonnage, sailing days, costs) to calculate annual profits, then apply a simple multiple to determine enterprise value. The critical insight is recognizing that the buyer may extract significantly more value by utilizing the boat's empty return journey—doubling potential profits—which justifies the $72M offer despite the NPV calculation showing $96M.

Estimated Time 16 minutes
Difficulty Easy
Source Columbia
10 / 100
Our client owns a boat, and he wants to know if they should sell it or not

Clarifying Information

  1. What type of boat is this? Client owns a supertanker
  2. What does the boat do/what is it used for? Oil transportation. Sails empty to Russia, picks up crude oil, and ships it back to the Netherlands. The clients pay him for the transport
  3. Who is interested in buying this boat? Container ship company is interested in the boat
  4. What is the capacity? 50,000 tonnage, can transport anything
  5. What is the boat’s useful life? 13 years old, 25 useful life
  6. What are the specs? Tech specs same as stuff in the market
Mock Interview
Interviewer

Our client owns a boat, and he wants to know if they should sell it or not

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

A boat owner must decide whether to sell a supertanker generating $4M annual profit for a $72M offer. Through revenue/cost analysis and benchmarking against new ship prices, candidates discover the buyer could nearly double profits by loading cargo on return trips, explaining the valuation gap and supporting a hold recommendation.

Key Insights:

  1. Build bottom-up financial models from operational data: capacity × utilization × pricing minus all direct costs
  2. Benchmark valuations against comparable assets in the market; a $150M new ship depreciating $6M/year implies a 13-year-old boat worth ~$72M
  3. Identify hidden value creation opportunities: the buyer’s ability to load cargo on empty return legs represents a material source of value not captured in current operations
  4. Compare net present value of holding the asset versus the offer price, incorporating discount rate assumptions and remaining useful life