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Medium M&A

StoreStuff

#Real Estate #Self-Storage
ProHub Comment

This is a classic M&A case with strong emphasis on identifying and quantifying synergies in the self-storage industry. The case requires structured thinking to evaluate standalone value, revenue/cost synergies, and operational opportunities. The quantitative analysis element (box size optimization) tests the candidate's ability to apply business sense to unusual operational scenarios.

Estimated Time 15 minutes
Difficulty Medium
Source IESE
50 / 100
Our Client, StoreStuff, is a successful chain of Self-Storage units, specialized in rental of spaces for both people and companies to store their belongings such as old documents, furniture, and all sort of equipment. A New York based company, StoreStuff is the market leader in the US sector and has grown steadily in the past 10 years, mainly through acquisition of smaller, regional companies. Aiming to increase their presence in the West side of the country, StoreStuff has identified YourPlace, a Self-Storage unit in Nevada, that seems to be a good target for an acquisition. The CEO has hired us to figure if they should move on with this acquisition.

Clarifying Information

  1. The company only provides the space for rental – no additional services such as logistics are provided by StoreStuff. Their buildings are owned and managed by the company.
  2. In the customer journey, a new client goes to the store or on-line, rents a space, and receives a password to access his Box. Contracts are paid, renewed and readjusted on a monthly basis.
  3. StoreStuff has 60% of total market, and the rest 40% is divided among smaller companies
  4. StoreStuff has 20 units mainly located on the East side. Each operating unit has an approximate $5Mi revenue. As Operational Expenses are low (mainly building maintenance and security), StoreStuff enjoys a 40% Net Margin
  5. A typical StoreStuff facility provides two sizes of rental space, called “Box”. The “Large Box” has 10 square meters, and the “Regular Box” has 2,5 square meters. Boxes can be both aggregated to form a larger one, or dismantled, to form small boxes.
  6. The company wants to understand whether this is a good target. So far, they are not worried with the size of the deal